Americans have been feeling more confident about the economy as of late due to a noticeable decrease in gas prices. According to a recent poll, this is the first time 52% of Americans have felt this way in 8 years. Brian Jacobsen, Chief Portfolio Strategist at Wells Fargo, has forecasted prices continuing to drop below $2.70 and may even drop as low as $2.50. Capital Economists also believe that these prices will remain this low into 2016. The reason these prices are remaining so low is because OPEC met on Thanksgiving day and decided to not cut production. Another reason has been the shale boom in North Dakota and Texas increasing supply in the market. It is nice to see people finally feeling confident with our economy and I am hopeful that these low prices remain.
http://money.cnn.com/2014/11/28/news/economy/gas-price-cheap/index.html?iid=SF_E_River
The drop in oil prices should give U.S consumer more income to spend elsewhere in the economy. This is good timing with the holiday season around the corner, U.S consumers can buy more goods and help stimulate the economy in a big way. Hopefully prices can stay this low with the booming shale industry to give americans more disposable income in the long run.
ReplyDeleteAn ideal rate of inflation is an important factor in determining economic growth. If gas prices remain low for a long period of time, it could effect the price level in a negative way, hindering economic growth.
ReplyDeleteI agree with both previous comments. With more money in consumers' pockets, more economic stimulation is on the horizon, but when gas prices keep falling, as voiced as a concern earlier in the semester, the government and FED need to be sure that not acting to increase inflation to offset the drop in gas prices will not negatively impact our economy, and if they foresee it doing so, then a gradual transition into some kind of policy needs to start taking place before people start getting too comfortable with the way prices are headed.
ReplyDeleteThis is good news for consumers right in time for the holidays. The reason being because less money spent on the pump will lead to more cash in people's pockets. We can now spend this money on other goods which is why it's good to have this cash during the holidays. It's also surprising that gas prices are staying so low for so long going into 2016. I agree with the other comments in terms of effecting the price level in a negative direction.
ReplyDeleteThese gas prices increase everyone's confidence in driving and going out to work every day and not worrying about filling up anymore. It's bad news for countries in the middle east who supplied the U.S. heavily in oil and could hurt shipping companies also but for America its great news. This seems to be the trending news story around the nation and us citizens should be grateful before it starts creeping back up.
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