May 15, 2009
Oil as an Economic Indicator
Further expectations of a global recovery seem to be increasing but this expectation seems to be tempered that a turnaround will not be quick. What seems to be happening is that many investors are seeing a potential bottom developing. The further distressed results from national economies and large businesses show how far the global economy likely has to go before it will return to positive and healthy growth: http://finance.yahoo.com/news/May-rally-for-energy-prices-apf-15262114.html?sec=topStories&pos=8&asset=&ccode=.
Much of this can be seen when looking at what has happened with crude oil, as explained in the above link. Prices are higher but that is primarily because refineries have been lessening production due to the lower demand.
One other sign from this article is that more Americans will travel over this Memorial Day this weekend when compared to last year. Most expectations peg the summer travel season as disappointing because the number of people who will travel will likely decline.
This can be seen that economic factors may start to move in a horizontal manner with some positive and some negative results. The dealer cuts that Chrysler has just enacted can result in more job losses although the number is unclear since some dealerships may shift to selling used cars. Employee ranks would likely shrink so there would be a net loss of jobs.
Some experts are taking even more negative views of how the economy will perform over the next decade: http://finance.yahoo.com/tech-ticker/article/248398/"The-Worst-Is-Yet-to-Come"-If-You're-Not-Petrified-You're-Not-Paying-Attention?tickers=^DJI,^GSPC,DDR,XLF,GM,RWR?sec=topStories&pos=9&asset=&ccode=. The amount of debt will impact growth to such a degree that living standards will not be able to increase according to this expert.
All of these factors must be weighed but it is important to keep up with this especially as you may be thinking about greater investment into real estate and business. It cannot dissuade you from making these decisions but can help keep you further informed.