It is always good for our economy when oil prices are lowered. Everyone will have decreased costs and more money to spend elsewhere. It does decrease the economic outlook for all companies in the near term only due to the fact that income will shoot downward for a time due to oil’s price deflating what people will now spend for the same good (per each company).
In the mid to long term, the economy bounces higher and more jobs migrate to the U.S. from China.
It’s more of a mixed bag now than it has been in the past with the fracking boom. My region of the country suffered worse effects from the 2008 crash than most, I’m in the southeast and in a manufacturing dominated metro. Inexpensive natural gas resulting from fracking has helped fuel, literally, something of a manufacturing renaissance here and so it’s been a godsend. Gasoline prices falling has been and will be as well. However, beyond a certain point prices falling will threaten the domestic industry that led to that manufacturing renaissance and we appear to have reached that point, so it’s become a bad thing from my perspective. The price per bbl of oil needs to remain in viable territory for domestic fracking to continue and expand. Falling price can be bad and is for this reason.
“It is always good for our economy when oil prices are lowered.”
It’s good for the “real” economy.
However, the “real” economy is dwarfed by the “leveraged” economy - which is not real.
The lower price of oil is going to very possibly precipitate the collapse of leveraged assets (including ultimately stocks) because credit to marginal or high-cost energy producers will be destroyed - and the lenders will have to recognize this loss (and the consequences of such a loss).
If we had stuck with a “real” economy for the past 7 years or so, we’d be expecting an uptick economically from lower oil prices. Instead, the “fake” growth and GDP over the past years will revert to a significantly lower level.
Of course the Fed could bail everyone out......and protect those who made irresponsible loans to marginal energy producers by buying all their bonds (just like they’ve done in the housing market). Expect that to happen. Otherwise we must capitulate to all the growth during the Obama administration was mere illusion created by Fed manipulation.
No threat to the Obama economic illusion will be acceptable, that’s why I see marginal oil loans ending up on the Feds balance sheet, along with all the other garbage.
There is an argument making the rounds that this slump in oil is not going to be good for the general economy because there is such a large number of people that work for or are impacted by a slow down negatively. And lower prices do not offset the damage to the sector. Not my position but still a pause point for reflection.
--except when the lowering is becuase of the crashing economy's falling demand? Then again, even this is good becuase it's the 'self-correcting' aspect of the free market as falling prices stimulate renewed demand...