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Many people think that with a Barrel of oil in the high $50 range, it will eventually pull the economy into recession...that the average family faced with higher fuel costs will have to economize of other areas of their budget...like forgo going out to eat, buying that new motor home and this will all have a chain reaction effect...Also there has been a noticable slow down in the sales of the more gas guzzling varieties of automobile on the road....Also one has to consider that with increased fuel prices the costs of goods and services have to rise.....in one word Inflation will set in...thus the economy will slow and the USA will slide into a Great Recession

Now lets take a look at the economic picture... Housing prices have risen dramitically over the past several years, for several reasons, one is a low interest rate environment, lack of other good investment vehicles and prices were low given the demand...thus the rise in housing prices has merely brought the sector into a price equilibrium. When interest rates go higher and make the current price structure unaffordable housing prices will seek a new equilibrium at lower price levels... Another factor is the decline in the Dollar in world currency markets....this is also inflationary in that it now takes more US Dollars to buy overseas goods. The cause of the Dollars decline has been largely due to the deficit spending on the part of the US Government, it also has been the policy of the current administration to devalue the dollar so that US goods and services are more affordable overseas.. The third area to look at is the US Bond market...The Fed orginally lowered interest rates after 911 to keep the economy from going into the tank by providing fiscal stimlus. Now the Fed has increased rates with an eye on curbing the irrational exhuberence in the housing market...yet the increase in shorterm rates has not translated into substantially higher mortgage rates nor higher long term Bond rates...showing that the demand for these Bonds remains high due to their relative security in an uncertain world situation. Lastly one needs to look at the US Stock Market. It has traded relativily flat for the past year or so...facing a wall of worriies starting with the uncertainities in the world situation, the outcome of the US elecetion cycle, moving onto the effect that the rise in oil prices will have on the economy...

Thus with close examination of each of these markets one finds that the high price of fuel has been factored into the current price structure and the economy has allready adjusted itself to these price levels and there will be no recession in the forseeable future...