Why the Oil Rout Has Spread

Posted December 22, 2014 at 6:00am

“This month’s big fall in the price of oil should be good news for much of the world’s economy. But so far markets have been telling a different story,” the Wall Street Journal reports.  

“Analysts remain confident that cheaper oil is merely a case of delayed gratification for the global economy. Consumers will have more money in their pockets, and companies outside the energy sector will benefit from lower costs. Credit Suisse economists calculate this is equal to a $100 billion tax cut for the U.S. economy alone.”  

“But though the boon is substantial, it will take awhile to feed through to economic data. Meanwhile, the effect of investors dumping stocks and bonds related to the energy sector has rippled across financial markets.”