The positives
Buoyant consumers. With the price of a fill-up falling to its lowest level in 11 years, U.S. consumers will spend $750 less per household on gasoline this year than they did in 2014, the government estimates. That will spur consumer spending, which will lift the whole economy.
Tepid inflation. Declining energy prices tamp down inflation, which makes it easier for the Federal Reserve to keep short-term interest rates near zero—a boon for stocks.
Business beneficiaries. Airlines, truckers and package-delivery firms will save a fortune, given that fuel accounts for as much as 40% of their costs. Retailers, restaurants and hotels benefit directly from increased consumer spending. Banks and credit card companies also win; revenues from transaction fees go up, and consumer defaults are likely to go down.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Political pluses. Lower oil prices hurt the economies of some energy-producing U.S. adversaries, particularly Iran, Russia and Venezuela. That could make the world a little safer.
The negatives
Industry slump. Falling oil prices hurt a key sector of the stock market. Since its peak last summer, the S&P Energy index has dived 21%.
Sagging economies. Though higher supply is a major reason for oil’s drop, investors worry that persistent declines are a sign of falling demand due to slowing global growth.
Job losses. Oil at $50 a barrel could end the fracking boom and harm conventional drilling, too. Massive job losses could ensue.
Less business spending. Nine of the nation’s 20 biggest spenders on machinery and equipment are energy firms. Expect them and others to cut back on capital outlays.
Junk woes. As oil prices have fallen, concerns about the viability of heavily indebted producers have climbed, so high-yield bonds have taken a hit.
Foreign fears. Sinking oil hurts big energy-producing nations and raises concerns that they and their national oil companies could default on their debts.
-
Winning Strategies for Financial Advisers as Clients' Lives EvolveHow can the wealth management industry help make life transitions easier for the adviser and the client?
-
How Advisers Can Establish Relationships With HNW ProspectsThese strategies can help to build influence with high-net-worth individuals, who are often looking to an adviser for insight rather than solutions.
-
CPI Report Puts the Kibosh on Rate Cuts: What the Experts Are Saying About InflationCPI Consumer price inflation reared its ugly head to start the year, dashing hopes for the Fed to lower borrowing costs anytime soon.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
CPI Report Keeps the Fed on Track: What the Experts Are Saying About Inflation
CPI Disinflation in key areas of consumer prices should help the Federal Reserve stick to its policy path of gradual cuts to interest rates.
-
Blowout December Jobs Report Puts Rate Cuts on Ice: What the Experts Are SayingJobs Report The strongest surge in hiring since March keeps the Fed on hold for now.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
CPI Report Casts Doubt on Rate Cuts in 2025: What the Experts Are Saying About Inflation
CPI November Consumer Price Index data sealed the deal for a December rate cut, but the outlook for next year is less certain.
-
Rebound in Jobs Growth Keeps Fed on Track: What the Experts Are Saying
Jobs Report No nasty surprises in the November payrolls data leaves a quarter-point cut in play.
-
October CPI Report Hits the Mark: What the Experts Are Saying About Inflation
CPI While the current pace of rising prices appears to have leveled off, the expected path of rate cuts has become less certain.
