One of the biggest impacts to the US economy is the cost of oil. We are still the leading consumers, though our lead is being taken over by China. It is no surprise that the price of oil/gas can either fuel US economic growth, or bring it to a crawl. I remember (somewhat fuzzy) as a kid waiting in line for gas, and I sold my Ford Expedition in fear that gas was going to see $5/gallon last year. While perhaps I sold the car a little prematurely, the basic fundamental truth about the control of the price of oil is well beyond me. And in someways beyond any of us.
OPEC mostly gets away with what it wants in terms of prices, and China is clearly working to leverage its relations with OPEC countries to improve its position. While this isn’t necessarily bad for the US, we do lose some of our bargaining power. And as China continues to increase demand, it drives up market prices.
I am going to try to add the Price of Oil to the Baumohl Indicator series on a bi-weekly basis. My goal is to continue to explore some of the indicators of US Economic Performance and how they impact business cycles.
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