Rising oil prices don't seem to be hurting the stock market just yet. The Dow Jones industrial average has soared nearly 300 points over the past three days despite the fact that crude oil prices have busted past $70 a barrel.
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But what they could do to the economy may be a different story. For the second time in as many months, the index of U.S. leading economic indicators has sunk, dipping 0.1 percent in March, according to the Conference Board. This comes on the heels of a 0.5 percent decline in February.
Though the index still points to an economy that will continue to expand, growth is expected to be moderate. How moderate will depend on several factors, including energy costs and interest rates.
While it's impossible to predict with any certainty where oil prices are headed, many fear that continued tensions between the United States and Iran over Iran's nuclear ambitions will spook the oil markets. That, in turn, will probably drive oil prices even higher, putting more pressure on the economy.
Gasoline prices are already hitting $3 a gallon in some areas. Should gas prices continue to climb, especially as the summer driving season nears, that could eat away at the discretionary spending of U.S. households.
What's more, rising oil prices will eventually seep into the economy in the form of rising costs, to be borne by manufacturers and consumers alike. "My sense is, there will be more inflationary pressures going forward," says Mark Zandi, chief economist for Moody's Economy.com.
Of course, if that should come to pass, eventually even stocks will be affected.
