Kentucky gas prices fall, could a recession be coming?

Posted at 9:04 PM, Jul 08, 2022
and last updated 2022-07-09 11:40:27-04

LEXINGTON, Ky. (LEX 18) — Gas prices have been falling in Kentucky, but that may not necessarily be a good thing in the long run.

Prices over the past month in the commonwealth have gone from $4.82 a gallon to $4.45, representing one of the biggest month-to-month drops in the nation, according to Gasbuddy.

Experts say what’s good for your wallet may not be good in the long term.

“Gas prices go whichever way the economy goes,” said Patrick De Haan of Gasbuddy.

The recent decrease is in part because people are concerned about the economic future, he said.

“Recession concerns have certainly been growing and it goes back to the fed’s efforts to tamp down inflation,” said Michael Clark, an Associate Professor of Economics at the University of Kentucky.

The federal reserve both wants to curb inflation while keeping people at work. It’s a balancing act he admits is difficult, in part because they rely on at times outdated data.

“The fed has what we call a dual mandate,” Clark said. “The problem with that is more you steer toward one, the more you steer away from the other, so while we try to deal with inflation, that does mean there might be less employment growth.

The unemployment numbers released Friday show rates holding steady at 3.6%. Some people told LEX18 they think the federal reserve should be less aggressive with rate hikes in the future to guard against a recession that could lead to many people losing their jobs, while others said it was paramount to get inflation under control.