With the holidays just around the corner, those keeping an eye on gas prices as they begin planning trips to see loved ones may be in for good news if the gas prices do, in fact, decline, as anticipated.
A "soft landing" in the United States in 2024 appears increasingly possible, the International Monetary Fund said on Wednesday, as the strength of the consumer and investment continue to hold up against an environment of high interest rates designed to lower soaring inflation.
The IMF projected inflation, through the lens of fuel commodity prices, could decline.
"Prices of fuel commodities are projected to fall on average by 36 percent and oil prices by about 17 percent, with the decreases reflecting mainly the slowdown in global economic activity," the IMF said.
IMF's forecast is shaped by an anticipated fall in oil prices. The multilateral lender anticipates that the average price of oil will hit about $80.50 a barrel by the end of the 2023 year, and decline to a little under $80 a barrel in 2024. Should that prediction hold, it may help lower gas prices as well.
The U.S. is expected to grow its economy by 2.1 percent in 2023 but will only expand by 1.5 percent next year, suggesting the "soft landing" scenario, that despite policymakers hiking interest rates there will be less damage to the labor market and growth.
The IMF said that the unemployment rate in the U.S. is projected to hit a peak of 4 percent towards the end of 2024, which was lower than previous forecasts of above 5 percent unemployment "consistent with a softer landing than earlier expected for the US economy."
But the projections from the Washington, D.C.-based, lender suggested that there are risks to the economic outlook for the U.S. and other global economies.
The Ukraine conflict could deteriorate further and hurt supply chains for food and other commodity prices that could in turn put pressure on prices. Geopolitical tensions, such as the fighting in the Middle East between Israel and Hamas, could inflame oil prices.
"A rise in oil prices driven by a reduction in oil supply could reduce global economic activity and raise inflation," the IMF said.
Analysts have expressed fears that if the war in Israel broadens to ensnare other countries in the region it could affect the oil supply and push up prices.
West Texas Intermediate, which follows the price of oil from American sources, was down more than 3 percent to about $83 per barrel as of 11:11 a.m. ET on Wednesday, according to Bloomberg data. Brent crude, a benchmark for global oil prices, was also down close to $85 per barrel, a decline of 2.6 percent.
The fall in prices is seen reflected at the pump across the U.S., according to the American Automobile Association. The national average fell seven cents to $3.76 in the first week of October helped by declining demand and a drop in the cost of oil.
"Drivers are finally seeing some relief at the pump as the seasonal swoon picks up momentum," Andrew Gross, AAA spokesperson, said in a statement last week. "At least one state has locations selling gas below $3 a gallon, and we should begin to see more states join in over the next few weeks."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more
