That's what the Washington Post headline told readers. If this one left you scratching your head, you weren't alone. After all, we expect that a rise in oil prices will take money out of consumers pockets and therefore slow growth. This is the sort of event that prompts Congress to design stimulus packages. So, why wouldn't a stimulus be effective? Actually, the article does not tell readers that a stimulus will not work. It just says that rising oil prices are creating an even bigger problem than what we were already facing due to the collapse of the housing bubble. The real implication of the information presented in the article is that an even bigger stimulus may prove necessary to boost the economy.
--Dean Baker