US consumer sentiment up, oil surges past $125
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The US consumer sentiment as, monitored by RBC Financial Group’s RBC CASH (Consumer Attitudes and Spending by Household) index, edged up after 6 consequential months of decline. The index was up by 10 points but consumers were had mixed feelings about the economy and employment security. The RBC CASH study includes 1,000 respondents per wave, with a quarterly sample of 3,000 respondents.
Consumers who responded had a better feeling about the state of their local economy as well as the situation on their personal finances. This renewed optimism was somewhat dragged down by their concerns about the job market. According to RBC, “The fact that Americans’ perception of the jobs environment weakened is not inconsistent with the rebound in the overall index, as the job market tends to lag the economic cycle.”
The renewed optimism is despite the fact that household expenses for consumers are not looking to go down any time soon. The pain at the pump continues and food costs are rising. Light crude contracts hit a fresh new high and topped $125 a gallon as the US driving season approaches.
Investors view commodities such as oil as a hedge against inflation, and some analysts think the dollar’s protracted decline is the main reason behind oil prices doubling from a year ago. With the federal reserve lowering interest rates in order to mitigate the fallout from the credit crisis, inflation is now a real concern as per economists. Also, a weaker dollar makes oil cheaper to investors overseas.
The Associated Press reports on a new Goldman Sachs prediction that crude oil prices will hit $150 - $200 a barrel in 2 years. Speculation about lowered crude oil production from Mexico and Russia also pushed prices higher. AP video commentary linked to AP YouTube below.
Several consumers and analysts are questioning the price increases in crude. Many speculate this as a oil commodity bubble waiting to burst.
