by Ryan Avent
Let me also extend my hearty thanks to Ezra for having me here this week. I'll do my best to match the quality you all are used to. Let's get started, shall we?
Markets appeared to celebrate the continued slide of oil prices yesterday, and why shouldn't they? Rising oil prices have squeezed corporate profits across the board, and the inflationary pressure expensive oil generates forced the Fed to bring an early end to interest rate cuts. Oil is now down over $30 from its recent high around $147 per barrel. Sure, that's still well above the price a year ago, but cheaper oil has to be good news, right?
Not really. The recent decline in oil is a signal that traders think the global economy is going to get worse. Demand growth pushed prices up. Falling demand has allowed prices to fall. That's important, but strapped American drivers are unlikely to fret. A year ago, gas at $3.50 per gallon would have had jaws dropping. Now, drivers are likely to hug pumps that are once again showing prices below $4 per gallon.
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