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Economist warns lower gas prices this week in NC could indicate potential recession

Gas prices are down in the last week in North Carolina, but an economist explains why it could signal a recession is coming.

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By
Sarah Krueger
, WRAL Durham reporter

The average price of unleaded gas in North Carolina has dropped nine cents in the past week.

Tuesday data from the American Automobile Association shows the average price for a gallon of gas in North Carolina is $4.43 whereas it was $4.52 last week.

The prices are down from North Carolina’s all-time high of $4.67 per gallon three weeks ago.

WRAL News spoke with Kenan Institute of Private Enterprise Chief Economist Gerald Cohen about how he believes gas prices will continue to go down in the coming weeks. However, Cohen believes the reason behind lower prices could be fears of a recession.

“Economic activity slows, gasoline demand slows,” Cohen said. “If they’re coming down because people think we’re in a recession, then that’s bad.”

Cohen said he believes a recession is worse than paying higher gasoline prices. He also said it’s impossible to predict how far gas prices will fall due to the volatility of the markets. Also, Cohen explained why wholesale gas prices are declining.

“’[It’s] probably that the markets are fearing that demand is going to decline because of the recession, or a potential recession,” Cohen said.

Cohen said he agrees with Pantheon Macroeconomics Chief Economist Ian Shepherdson’s tweet about a “meltdown” of wholesale gas prices on Tuesday.

“If this trend holds, and that’s an important if, then gasoline prices should be coming down,” Cohen said.

What drivers say about the lower gas prices

On Tuesday, Diamond Hunter said told WRAL News she must drive for work for her pet care business.

“I’m spending a lot of the money that I’m making to buy gas,” Hunter said.

The high prices have forced Hunter to change her day-to-day plans.

Odell Henderson Jr. agreed about the high gas prices.

“It makes you want to stay in the house more because it costs so much to use gas to go here and there and come to work and things like that,” Henderson said.

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