The Economy - Stocks

Stocks were down considerably yesterday. So far stocks have been down for the first two trading days of 2015 (and are down thus far today). The big news though has been oil, which is still falling. Oil is now bellow $50 and still falling! Lower oil prices is good news for those of us who do a lot of driving (and anyone else who needs a break in gas prices), but the sudden collapse is not good for the rest of the economy. Just today US steel announced that it is idling two steel plants and might be laying off hundreds of workers all because of the fall in oil prices. Yes, oil was too high, but the high prices were driving a boom in everything related to the oil business (and many other sectors of our economy as well), which included a lot of great paying jobs. Now the layoffs and idling will begin, which will spread across the economy and cause a recession. The last thing we need right now is a recession. If the price of oil stays below $50 for any prolonged period of time (six or more months) things will get ugly. I think these down days on the stock markets will not be our last.

The Economy - Price of Oil

I love going to get gas. The price just keeps falling and it is so nice to have a few more dollars left in my pocket. Unfortunately, as I have pointed out before, falling oil prices are good for consumers, but not so good for producers. As I write, domestic oil producers are announcing job cuts, reduction in production, and a curtailing of future oil projects. This is especially the case for shale oil producers who need oil to be above $70 to make a profit. Now I am not a fan of the oil companies (as many others), but they have become the driving factor in the current economic recovery (if you even believe we ever had one). If you take away the jobs and money infused into the economy by the oil producers, you can kiss any hopes of a sustained recovery away. If the price of oil stays below $70 for any length of time (six months or longer) we will have serious repercussions in our economy. Hopefully oil prices will settle at about $75 a barrel and we will have some stability. If not, hold on because things can get ugly.