U.S. citizens may have to "tighten their belts" a little in the future, two Brigham Young University professors say.
Earl H. Fry, who teaches international economy and who also has done economic consulting, said parts of the United States are definitely in a recession."We don't need this right now," Fry said, referring to the effect the Middle East crisis is having on U.S. recessionary trends.
It is too much on top of other domestic problems such as coping with the savings and loan crisis and possible similar problems with the banking industry, he said.
Val Lambson, who specializes in international trade and development, said the economic expansion of the 1980s had to end somewhere, and a recession was due to curb that growth.
Lambson said people should not make a run on the banks yet. "Saving is still a good idea," he said. "But consumer debt (such as credit cards) should be avoided wherever possible.
"I don't think it (the recession) will be that bad," he said. But the situation in the Persian Gulf is so volatile right now that anything could happen.
Lambson said that even though the United States has a good supply of oil and is not as dependent on foreign oil as other countries, a 5 percent to 10 percent decrease in the amount of imported oil could have a dramatic effect.
But, the recent increase in oil prices is less onerous on the United States than on its allies in Japan and Europe, Fry said. "The United States is only 50 percent dependent on foreign oil, and the others are almost entirely dependent."
Fry said, "I don't know much about the area, but I do know that as long as tensions remain high the price of oil will remain high" because of a fear of conflict.
"It is a tremendous drag on the economy," Fry said. If a peace settlement seems possible, the price of oil could go down.
"In terms of the current supply, there is no reason the price of oil should not be in the $20-a-barrel range," he said.
Fry said the biggest difference between the United States and other Western powers is that in the last oil crisis, in the early 1970s, Japan and Western Europe did a great deal in the way of energy conservation. "They found alternative fuel sources and have planned for another crisis," he said.
During the last oil crisis, the Western nations ended up not helping each other very much, Fry said. But most nations found their own way to deal with the situation.
"But, this time, I think things would be a little different," he said.
Fry said he thinks the United States would have to aid other nations as opposed to vice versa, and this has caused the country to be wary of the source of its resources.