The Schork Group principal Stephen Schork warned on Tuesday that the United States is on the “cusp of recession” if it has not already started.
Schork made the argument as inflation sits at 40-year highs with the price of food and gas remaining at elevated levels.
Speaking on “Mornings with Maria,” he stressed that gas prices are at “unprecedented” levels that Americans “simply cannot afford.”
The national average for a gallon of gas was $4.96 on Tuesday, slightly lower than the day and week before, but 37 cents higher than the prior month and $1.89 higher than the year before, according to AAA.
Gas prices have been hitting records recently with the national average sitting above $5 a gallon last week, according to the association.
In fact, the average price for a gallon of gas remained below the $5 threshold for a fourth straight day on Tuesday, according to AAA.
|USO||UNITED STATES OIL FUND L.P.||83.34||-4.32||-4.93%|
|BNO||UNITED STS BRENT OIL FD LP UNIT||33.12||-1.71||-4.91%|
Oil prices rose on Tuesday, clawing back more of last week’s losses as investors focused on tight supplies of crude and fuel products rather than concerns about a recession potentially dampening future demand.
Brent crude futures rose more than 1% to $115.34 a barrel on Tuesday morning, adding to a 0.9% gain the day before. The international benchmark contract dropped 7.3% last week in its first weekly fall in five.
U.S. West Texas Intermediate crude futures rose to about $109 on Tuesday morning, up about 1.7% from Friday’s close. There was no settlement on Monday, which was an American public holiday.
When asked whether he believes gas prices will continue to pull back long-term, Schork responded, “absolutely not” given prices were still sitting close to $5 a gallon.
“We are still in unprecedented levels at this point,” he stressed.
Schork pointed to the “current rate of inflation,” noting that “real disposable income, what we actually have to spend in this high-priced environment, is now growing at the fastest pace in ten years.”
“Our savings rates are at the lowest point in 14 years and credit card debt is growing at the fastest pace in ten years,” he continued.
“So clearly we are running out of money and we are accumulating debt.”
Schork explained his fears going into summer, noting that people have been pent-up due to COVID and are inclined to spend money despite inflated prices.
He went on to argue that Americans are “fed up with COVID” and will still go on their vacations.
“Gasoline demand, despite these prices, is very strong – so they will continue to spend come heck or high water because they want to get out,” Schork argued. “They have got that cabin fever and they are going to reconcile the bills when they come due in the fall.”
Schork then argued that “we’ve never had an environment like this with these high prices, not just at the pump but also more importantly at the grocery counter, and we’ve never avoided recession.”
He stressed that if the U.S. is not already in an economic downturn, America is “definitely heading towards” it.
Earlier this month it was revealed that inflation remained painfully high in May, with consumer prices hitting a new four-decade high that exacerbated a financial strain for millions of Americans.