Usually economists label a measure a leading or lagging economic indicator, however today’s AP article on the impact of falling energy prices sounds more like a bunch of mush. Economists cite rapidly rising oil and gas prices had virtually no impact on economic growth last year and most of 2006. With energy costs such a small portion of the U.S. household budget, why would their decline now foreshadow gloom?
The article later states the stagnating real estate market and higher interest rates are the real concern of economists. So why does the media via its title suggest falling energy prices to be problematic? Could it be to set the expectation for their rise?
With September on the downhill side, 3rd quarter oil company books will close in less than two weeks. These profits will hit the newsstands just weeks before the November elections. They will be significantly less than the record levels seen the last 4 quarters, as the oils don’t want an upset populace marching to the voting machines, electronic or not.
Yet, they need to get prices moving upwards to get back on track for a record 4th quarter. What better way than have the media imply rising energy prices would be good for the economy! Down the rabbit hole, we continue to go….
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