Unexpectedly Intriguing!
28 February 2011
Gasoline Price Sign - Source: scoreboards.net

Previously, we found that the average price of a gallon of gasoline in the U.S. can be used to forecast what the U.S. unemployment rate will be about two years ahead in time.

Since then, gasoline prices have been rising pretty significantly across the U.S. and are predicted to rise even further, so today, we're presenting a tool based upon our analysis that you can use to anticipate what the jobs situation will be like two years from now.

To find out, enter the latest average price of a gallon of gas in the U.S. into the tool as well as the most recently available value for the Consumer Price Index for All Urban Consumers, which lets us take inflation into account, and we'll project what the U.S. unemployment rate will likely be two years from now.

Now for a quick word of caution. The correlation between gas prices and the unemployment rate is positive, but is only of low-to-medium strength, which you can see in the spread of the data points about the trend line in our chart showing the correlation.

Basic Investment Information
Input Data Values
Average Price of a Gallon of Gasoline
Most Recent Consumer Price Index (CPI-U) Value

Projected Unemployment Rate
Calculated Results Values
Projected Unemployment Rate

What that means is that while higher gasoline prices do generally translate into a higher unemployment rate two years into the future and lower gasoline prices translate into lower unemployment rates, the actual unemployment rate two years from now can be significantly different from what the tool forecasts.

As such, our tool is best used to anticipate the general trend in the unemployment rate rather than the specific unemployment rate.

For example, using the default data for our tool, which takes the average retail price of motor gasoline in the United States from 21 February 2011 and pairs it with the Consumer Price Index for All Urban Consumers (CPI-U) from January 2011, our tool projects that the unemployment rate will be about 8.3%, which is lower that the 9.0% unemployment rate reported in January 2011, suggesting a mild improvement from now until then.

However, if average gasoline prices rise quickly to exceed $3.50 per gallon across the nation, as they already have in California, our tool would project that no significant improvement in the U.S. unemployment rate will take place over the next two years.

Previously on Political Calculations

Labels: , ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Indices, Futures, and Bonds

Closing values for previous trading day.

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button


The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Shopping Guides
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.