It must be nice being an economist for a living. Much like meteorologists, university professors, and the Clintons, getting almost everything wrong doesn’t seem to impact job security. Remember when economists were forecasting 3 percent GDP growth for 2014? Well, that is pretty much already debunked, after the first quarter contracted by more than a full percent; but the rest of the year might have its own distinct setbacks. The biggest “headwind” we can expect in the second half of 2014 can be summed up in two words: Oil prices.
David Williams, with Williams Edge, expects the price of crude to increase by “biblical” proportions in the near term. And while his technical analysis is sound, it is further buoyed by the events unfolding throughout the Middle East. Some experts have even predicted oil climbing above $125 a barrel. Let’s face it, $125 oil isn’t exactly going to help an economy that is clawing and scratching for the most modest of gains.
Hooray! Higher gas prices! And this hike in prices, of course, will conveniently coincide with increased inflation, stagnating wages, record joblessness, and anemic economic growth. (Haven’t we seen this movie before?)
As prices start to climb, those evil speculators and oil companies will quickly earn the wrath of liberal pundits and clueless CNBC analysts. And, really, the message is bound to stick. I mean, it’s pretty easy for people to hold a little grudge against big businesses when they’re watching those numbers roll over at their local gas station. But, the truth is much simpler than some convoluted conspiracy between “speculators” and oil giants… After all, contrary to the rants of anti-business liberals, oil companies actually prefer slightly lower prices. Unreasonably high prices tend to curb consumption; and let’s face it: You can charge anything you want for a gallon of gasoline, but if people aren’t buying it you won’t make much of a profit.
The bigger news (yes… there are more important things than the profit statement for Exxon Mobile) is what such prices will do to our already fragile economy. And the blame can be put squarely on the shoulders of our almighty central planners in DC.