I was relatively surprised to hear of the market's slide as I half-listened to Marketplace while preparing lamb curry for dinner. There, analysts asserted "terrorism fears" were the dominant reason for the slide, a conclusion the NYTimes supported as well. My interest, however, increased exponentially when I read the second half of the Times brief para on the subject in today's report:
The turbulence in the Middle East discouraged equity investors already uneasy about a slow economic recovery and tepid job growth. Wall Street was also worried about decreased consumer spending due to rising oil prices. [emphasis mine]
So I've only been blathering on about this very possibility for nigh over a year now, about every time we've seen a serious spike in prices. $40/barrel has generally been what more analysts regard as the potential tipping point back into recession, and prices have bounded above $38/barrel in recent weeks.
But that it took this long for Wall Street to put 2 and 2 together is remarkably surprising...or maybe just plain worrisome. If consumers are pouring $30 bucks or more into their gas tanks every time they fill up, it's likely they won't be spenting that money elsewhere, like at the Gap or Home Depot.
It's not rocket science. But then, how long before Bush cancels the space program due to high fuel prices?
Posted by MB Williams at March 22, 2004 07:19 PM | TrackBack