"Oil, rising rates could spoil the party"/ CNNMoney

[TexasLawyer]

For lack of a better word... "DUH!"

Oil, rising rates could spoil the party

Economists worry that crude at $70 a barrel and higher long-term interest rates could slow the economy; handicapping a recession.

By Chris Isidore, CNNMoney.com senior writer
April 24, 2006: 11:08 AM EDT




NEW YORK (CNNMoney.com) - The United States rode out oil above $70 a barrel last fall but long-term interest rates were low. And consumers have grappled with mortgage rates at current levels but never when they were paying $3 or above for a gallon for gasoline.

Even without rates or energy prices at these levels, most economists were looking for slower economic growth in the second half of this year. But if $70 or $75 oil persists and rates keep rising much further, the one-two punch could take a bigger bite out of consumer spending than previously expected. Some economists even see the threat of a recession if recent increases continue.

"It could be a very big hit," said Dean Baker, co-director of the Center for Economic and Policy Research. "I'd say there's a 10 to 15 percent chance of negative growth if we see a spike in interest rates, or a really big jump in energy prices."

<snip>

"Fundamentally, money you spend at the gas pump is money you don't have to spend at the mall," said David Wyss, chief economist for Standard & Poor's. And Wyss said that consumers are far more affected by the rise in the longer-term rates, measured by yields on the benchmark 10-year Treasury note and fixed-rate 30-year mortgages, than they are by the Federal Reserve raising short-term rates. "The economy responds much more to the long rates than to the short rates," he said.


<snip>

http://money.cnn.com/2006/04/24/news/economy/rates_oil/index.htm?cnn=yes

[AX10]

1. A recession is coming.

Remember those mortgages and credit card loans are do anytime now. It's a debt driven economy. Nothing sustainable about that.

[Kolesar]

19. turn those machines on and sell, sell, SELL!!

I keep hearing rumors of another big falloff in stock market equity valuations. How are earnings these days?

[Hardrada]

2. This is some f*king party we're having

right now.

[Duer 157099]

3. oh great

another party i wan't invited to

[depakid]

4. "I'd say there's a 10 to 15 percent chance of negative growth "

LOL.

Wishful thinking.

[TexasLawyer]

5. "negative growth"

now, that's a euphemism to chew on!

[Roland99]

7. That's just the flip-side to a positive loss

;)

[liberal N proud]

6. It has changed my spending habits

Just returned from a week long trip to Florida.
1. I drove the smaller car 1000 miles left my Sedan in the Garage.
2. I only went to the Theme Parks one day vs. 5 or 6 days.
3. Lounged by the pool or on the beach most of the trip.
4. Drove straight through to the final destination, No overnight motel stays on the road.

I don't know if I will take another road trip this year. Don't know if I can afford to. Normally there would be at least one more trip if not two.
Yes I am effecting the economy, I no longer go out on Friday & Saturday night. Dinners in the restaurant are a thing of the past.
That little landscape project, forget it.
Shopping on Sunday with the wife?, doubt we will be doing that unless it is absolutely necessary.

If we are all cutting back to pay for the gas, then yes the economy is going to suffer and even though they have been telling us it is such a strong economy, it will not take long to destroy it completely.

[Sequoia]

20. Time to take the train.

I've been thinking about it.

[aquart]

8. Ain't they clever.

[TheFarseer]

9. Think about how much money we are sending overseas

not just with oil. Think of the interest on the debt, outsourcing, illegals sending money back to their families. We can't keep sending our money out of the country and expect that to work out!

[AndyA]

10. Disaster looms ahead for Bush/Repugs

And if they play their cards right, come Fall, people in America will be FED UP with the Repugs and their policies. Policies that have brought about the highest fuel prices ever, while oil companies make a fortune in profits. Policies that have placed America in a precarious situation in the world wide economies. Policies that have our President pimping our country to the highest bidder, like the USA is a common street whore.

Yes, indeed. By November people will be COMPLETELY FED UP.

Fed up with high prices at the gas pump.
Fed up with the lies from the White House.
Fed up with lies from the Republicans in Congress.
Fed up with the Republican Party in general.
Fed up with higher and higher minimum payments on credit cards.
Fed up with doing without so the wealthy have a bigger slice of the pie.
Fed up with the scandals involving so many elected representatives.
Fed up with a President who is arrogant, secretive, and idiotic.

Yes indeed, it will be time for the Republican Party to take a bath this Fall. And if the price we pay in the meantime is high, perhaps the Dems gaining control of the House and Senate in November will take the sting out a bit.

Vengeance is ours, and karma sucks for Republicans.

[cliss]

12. Very true.

On Daily Kos today, the prediction is the same.

They're saying it's going to be "Torment and death".

[TexasLawyer]

13. Lots of people VERY fed up already

One of the reader rants up on CNN/Money:

http://money.cnn.com/2006/04/12/news/economy/readers_gas/index.htm


Wade: I think they should file criminal charges against the big oil companies! I have worked in the oil business for 17 years and know all too well what's taking place! Hell will be running over with executives from Enron to Exxon! Thanks for letting me rant!

[dchill]

11. This is the kind of wisdom...

that keeps me turning to CNNmoney time after time. I don't know where I'd be financially if not for the completely apolitical razor-sharp prognosticators at CNNmoney.com.

"Fundamentally, money you spend at the gas pump is money you don't have to spend at the mall," said David Wyss, chief economist for Standard & Poor's.

I had NEVER thought of that! Oh well, that's why guys like Wyss get the big bucks, isn't it? Or do they get the big bucks for telling us everything's abso-freaking-lutely BOOMING - when it, of course, is not.

[stillcool]

21. perfect.....

I haven't laughed like that in a while...:rofl:

[TexasLawyer]

22. LOL!!! Way too funny

Too true, too.
:rofl::rofl::rofl::rofl:

[wicket]

14. What is this "party" they're speaking of?

Most people I know are living paycheck to paycheck with a noose around their neck. :grr:

[Demeter]

15. Must Be the "Republican" Party

and that's going so well, too!

[lovuian]

16. A recession try a Great Depression these are the same

set of conditions which pushed America into a Depression... Robber Barons greed taking all the wealth of a nation in the hands of a few... No jobs No money No buy... economy stops

Republicans will get what they wanted All the money and great American poverty...

But it means Americans the driver of all the economies of the world will screech to a halt...

Capitalism is on its last gasp...The world is going to change thats for sure...

[TexasLawyer]

17. It's a good thing our new Federal Reserve chairman

knows a lot about Depressions. Could come in handy!

[DBoon]

18. Bush = Nixon

the parallels are astonishing