Dr Tyler Goodspeed, chief economist of ExxonMobil (NYSE:XOM) and the former chair of the Council of Economic Advisers in the first Trump administration, has provided an in-depth analysis of the historical causes of economic recessions.

During an interview with MarketWatch, published on Sunday, Goodspeed dismissed the idea of an AI bubble burst as a potential cause for the next recession, arguing that the triggers are usually more mundane.

He underscored that energy supply shocks have consistently been one of the main killers of economic expansions, contributing to 10 out of 12 U.S. recessions since 1945. He warned that a halt in traffic through the Strait of Hormuz, which accounts for 20% of the world’s petroleum, for several weeks could trigger a recession. 

“One of the most prolific killers of economic expansions, not just over the past 80 years, but really over the past four centuries, are energy supply shocks,” he said.

He also noted that the imposition of credit controls has historically contributed to economic downturns, citing a bill currently in Congress that could cap credit card interest rates at 10%.

 “…the imposition of credit controls was an accomplice to the murder of economic expansions in 1948, 1970 and 1980,” according to the economist.

Goodspeed also identified war as another “single most destructive” factor leading to some of the most severe and long-lasting recessions. 

Oil Shock Fuels Recession Fears

The International Energy Agency (IEA) has recently warned of a severe energy crisis, the impact of which is only beginning to hit markets. This crisis, triggered by the war in Iran, has disrupted the Strait of Hormuz, causing a surge in gasoline prices and a three-week losing streak in the S&P 500.

Furthermore, Fidelity Investments has suggested that oil prices breaking above $135 a barrel could lead to a full-blown recession. This aligns with Goodspeed’s warning about the potential impact of Hormuz -linked crisis.

At 6: 44 AM ET, Brent crude oil was trading 0.82% lower at $108.14 per barrel. Over the past month, the price has surged 24.01% amid the escalating war.

Rate Cap May Reshape Card Rewards

Meanwhile, the bill in Congress proposing a cap on credit card interest rates could also have far-reaching implications. Earlier this year, President Donald Trump threatened credit card companies with "severe" consequences if they fail to cap interest rates at 10%, warning that higher rates could be treated as illegal. He criticized lenders for charging 20–30% interest and framed the move as protecting consumers from high costs. The proposed cap is far below current average rates, which are typically around 25%.

Experts have warned that this could lead to a “K-shaped” outcome in consumer finance, potentially hurting the airline industry and limiting rewards for consumers. Dave Grossman, founder of Your Best Credit Cards, told Benzinga that if lenders can't price risk properly, rewards may shift toward wealthy customers, with premium cardholders getting better benefits while others receive fewer perks.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.

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