A temporary rise in prices aren’t necessarily a bad thing in a recovering economy, says Goizueta finance professor Tom Smith. But, when it comes to gas prices, there’s a limit to the healthy rise.
Speaking with FOX5 in Atlanta, Smith said the Federal Reserve needs a touch of inflation for its recession-fighting attempts to thrive.
“In order for the Federal Reserve Bank to be more influential with policies, we need to have some inflation and you can think about gas prices being part of that,” said Smith when asked about rising prices and how it could affect small business owners in Atlanta. But in general, people don’t like it. It impacts wallets in a very real way.”
Atlanta saw record-high gas prices back in 2008 with fuel topping off at more than $4 per gallon. Average costs ticked up again Wednesday in the Metro area to $3.31 per gallon.
Smith and fellow Goizueta finance professor Ray Hill agree a calming in the crisis-filled Middle East — a key oil-producing region — could drive prices back down. But if they continue to rise, the economy could again be threatened.
“I think the real concern is if these gas prices stay elevated the next month, five or six weeks, or increase because of speculation; then we could see ourselves heading into a recession,” Smith said.