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What Does $70 Barrel Oil Mean for U.S. Economy?
The U.S. economic recovery is on solid footing, supported by historically low unemployment, job growth and consumer spending. But one component that has not experienced similar growth of late is the oil sector. The price per barrel of oil dropped from $70 in 2014 to $26 in 2016, causing a ‘ripple effect’ from the oil producers to stocks, bonds and the overall economy.
Since that nadir, oil prices have steadily risen back into the $70 range, climbing 60% since last summer. That rally has been buttressed by production cuts by the world’s largest oil producers, which eliminated a massive glut, amid soaring demand.
U.S. producers are exporting more crude oil than ever, which could benefit the U.S. economy.
Still, there is a concern that rising crude prices may hinder economic growth. Higher gas and other energy products act as a tax of sorts that consumers must pay. Rising oil prices could push inflation higher, causing the Fed to bump interest rates more aggressive, too. The net result is that could slow growth and drag the stock market down.
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Economy
