With a weakening world economy and a strengthening US dollar, commodity prices are falling and that’s good news. In particular, the price of West Texas Intermediate crude has fallen from a 52 week high of $110.85 to $81.50, a drop of $30/bbl. Since every $10 decrease in the price of oil adds about 0.33% to GDP, if the price remain this low, it could boost GDP by 1%. That’s huge!
Tag Archives: Crude Oil
Trade Deficit Dynamics
The March trade deficit fell by 2.6% but, hold the applause. Imports fell 1.7% due to a fall in demand for crude oil. Exports fell 1.4% as US auto, industrial machinery & food products fell. As if the decline in exports was not bad enough, for the first few months of ’11 the deficit is running at an annual rate of $556 billion, up from $496 last year and up a huge 33% from ’09 when the recession cut deeply in US demand for foreign goods.