High Gas Prices Give Economy a Headache

Main Street and Wall Street finally admit financial pain
By Wesley Oliver,  Newser Staff
Posted May 24, 2008 3:52 PM CDT
High Gas Prices Give Economy a Headache
Ford is abandoning any hope of making a profit this year or next since sales of its gas-guzzling pickup trucks and Explorer sport utility vehicles have plunged.   (AP Photo/Gary Malerba)

Oil prices gushed for 5 years, but the US economy remained blissfully unaffected—until now, the Los Angeles Times reports. Rising gas prices have finally spooked consumers and sparked ominous news from two major airlines, Ford, and even memory card maker SanDisk. “The economic outlook has been taken hostage by the relentless surge in oil prices,” said one economist.

One expert has warned that the airline industry may never recover, because "it can’t survive $130-a-barrel oil." But an economist countered that oil prices "aren’t straws that break the economy’s back." To cope, Americans are driving less, and, to Washington’s chagrin, using their tax rebate checks to offset prices that could hit $4.75 per gallon this summer. (More gas prices stories.)

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