Time Out Of Mind

Janet Yellen told the world that the falling price of oil was “like a tax cut” for the US consumer.

There was a time when the US was almost completely dependent on imported oil so that a price drop in crude had little effect on GDP, so that Ms Yellen’s claim would have been somewhat true. Now that has changed. The falling price of oil reduces the incomes of domestic oil producers, which flow through directly to their employees and shareholders. GDP falls as the domestic economy shrinks. There is no good news for the US economy here. Oh, and the “stabilized” price of oil fell more than 9% today from its high, recovering to close down 7% from its high. Just a flesh wound.

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