WASHINGTON (Reuters) ? The White House on Wednesday said higher oil prices caused by Middle East unrest must be monitored but would not stall the U.S. recovery, while reiterating a warning on the risks posed by global imbalances.
"Thus far, they're up, but we're not forecasting -- and you haven't seen the private forecasters forecasting -- that at these levels they would derail the recovery," said top White House economist Austan Goolsbee.
U.S. crude oil reached a 28-month high of $100 a barrel on Wednesday as violence in OPEC producer Libya caused output there to be reduced and investors bet that unrest elsewhere in the region could cause additional disruption to supplies.
Goolsbee was answering a reporter's question during remarks on the annual Economic Report of the President, which takes a broad look at the outlook for the U.S. and global economy.
Oil's steady climb in recent weeks as popular revolts toppled autocratic leaders in Tunisia and Egypt, while sparking massed demonstrations elsewhere in the Arab world, has unsettled stock markets and applied a potential brake to growth in the United States and other oil-importing economies.
"We continue to monitor events of the Middle East and the fuel markets because they do have a negative impact. High fuel costs have a negative impact on the economy," Goolsbee said.
The Dow Jones Industrial Average closed down 107.01 points, or 0.88 percent, on Wednesday and traders blamed part of those losses on concern over the rise in oil.
Higher fuel prices act as a tax on U.S. households and businesses, crimping spending and potentially denting demand that could sap growth and hiring, which are slowly improving as the country recovers from the severe 2007-2009 recession.
The president's report focused in part on the risk the United States faces from instability caused by ongoing global imbalances -- a coded reference to the massive trade surplus that China runs with the United States.
This has been a steady argument by U.S. officials at recent meetings of the Group of 20 industrial nations, where they have argued for emerging economies like China to do more to boost their own domestic demand as the United States lifts exports. The president's report repeated this point.
"The world economy, however, must not only recover but also shift away from its pre-crisis pattern of growth that was too dependent on U.S. consumption," the report said.
The report, prepared by the White House Council of Economic Advisers, said it was not surprising that advanced economies were growing more slowly than emerging ones because that is part of a normal pattern, but it said the current gap is "unusually large."
Listing challenges to global growth, the report mentioned still-high unemployment rates and high fiscal deficits in developed countries.
It also noted that inflation was rising in some emerging economies, including China, and that the contrasting trends were putting pressure on exchange rates and money flows.
"The contrast between fast growth with rising interest rates in the emerging world and slower growth with lower interest rates in advanced economies has put pressure on capital flows and exchange rates," the White House said.
(Editing by Mohammad Zargham)
Powered By iWebRSS.com
