Joe Petrowski, former CEO of Cumberland Farms Gulf Oil Group, said on Monday that he is “absolutely certain” the United States will be in a recession.
Speaking on “Mornings with Maria,” he noted that a recession usually comes along with “every energy crisis,” especially since energy is 7% of gross domestic product (GDP), the broadest measure of goods and services produced across the economy.
He made the argument four days after it was revealed that the U.S. economy shrank in the spring for the second consecutive quarter, meeting the criteria for a recession as record-high inflation and higher interest rates forced consumers and businesses to pull back on spending.
GDP shrank by 0.9% on an annualized basis in the three-month period from April through June, the Commerce Department said in its first reading of the data on Thursday. Refinitiv economists expected the report to show the economy had expanded by 0.5%.
Recessions typically refer to two consecutive quarters of negative economic growth and Thursday’s GDP report revealed back-to-back declines in growth, bringing the economy to the technical criteria for one.
Economic output already fell over the first three months of the year, with GDP tumbling 1.6%, the worst performance since the spring of 2020, when the economy was still deep in the throes of the COVID-induced recession.
The Labor Department revealed last month that inflation accelerated more than expected to a new four-decade high in June as the price of everyday necessities remains painfully high.
The department said the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 9.1% in June from a year ago. Prices jumped 1.3% in the one-month period from May. Those figures were both far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists.
The data marked the fastest pace of inflation since December 1981.
Price increases extended across the board: Energy prices rose 7.5% in June from the previous month, and are up 41.6% from last year. Gasoline, on average, costs 59.9% more than it did one year ago and 11.2% more than it did in May. The food index, meanwhile, climbed 1% in June, as consumers paid more for items like cereal, chicken, milk and fresh vegetables.
On Monday, the average price of a gallon of gasoline slipped to $4.21, according to AAA, steadily declining since reaching a high of $5.01 on June 14.
On Monday, oil prices dropped as weak manufacturing data from China and Japan for July weighed on the outlook for demand and as investors braced for the upcoming meeting of OPEC officials regarding potential supply adjustments.
Brent crude futures were down 4.5%, at $99.30 a barrel on Monday morning. U.S. West Texas Intermediate crude was at $92.63 a barrel, down about 6%.
Brent and WTI ended July with their second straight monthly losses for the first time since 2020, as rising inflation and higher interest rates raise worries of a recession that would impact fuel demand.
Petrowski argued that the oil market’s gone down from its highs because “there’s a significant amount of people that believe there’s either going to be a recession or that we’re in one now.”
He noted that he is not sure whether the U.S. is in a recession now, but said that he is confident the country will be in a downturn in the near future.
Fox Business host Charles Payne joined ‘Kennedy’ to weigh in the U.S. economy entering a technical recession after GDP fell in the second straight quarter.
“I just don’t know how you’re not going to have a recession with food prices where they are [and with waning] consumer spending,” he added.
“I know everybody keeps dropping back to the labor market. That’s a lagging indicator, not a leading indicator.”
Last month it was revealed that the U.S. labor market remained solid in June as hiring paced ahead of expectations.
U.S. employers added 372,000 jobs during the month compared with 390,000 in the prior month signaling inflation had a limited impact on hiring thus far. The unemployment rate held steady at 3.6% for the third month in a row.
Employment data for July will be released on Friday.
“I really do believe as we go through the summer we’re going to see crude reach back to $150 a barrel and oil before Labor Day will be at that level and retail gasoline prices will exceed $5 again,” Petrowski warned.
FOX Business’ Megan Henney contributed to this report.