Thursday, November 04, 2004

Why Oil matters?

Business Week ran a article on How Costly Oil Will Test the Economy last week. The article highlighted the resiliency of this economy in face of rising oil price. But consumer confidence is starting to fade, falling for the third month in a row in October. Rising oil prices have directly hit the consumers and businesses in the pocketbook and knocked off 75 basis points from growth through the first three quarters of 2004. With Fed set to raise interest rates again on November 10th the Fed hasn't started to worry about Oil (publicly) yet. I hope they start worrying soon. I think rising Oil prices will dampen GDP growth worldwide and would consider a more defensive posture going into 2005.


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