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US Economy – A2 Declining Oil Prices
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US Economy – A2 Declining Oil PricesOil price increases are inevitable due to Asian demand – small declines in demand aren’t sustainable Dean Calbreath, financial columnist, 7-16-08 http://www.signonsandiego.com/news/metro/20080716-9999-lz1n16economy.html, '70s flashback would be bad trip for economy, San Diego Union-Tribune Severin Borenstein, director of the Energy Institute at the University of California Berkeley, said it's possible that the current oil-price increases could drive the economy into a prolonged recession, forcing more conservation among drivers. But Borenstein said he doubts that the decline in demand would have a lasting effect on prices. “A recession in the U.S. will definitely dampen demand here, and a worldwide recession would slow demand from China and India,” Borenstein said. “But it will probably only slow it. Demand in Asia will continue to rise, and that will continue to push prices higher.” US Economy – A2 Decreased DemandA reduction in demand is insufficient – continued rise in oil prices means further recession Jad Mouawad, masters degree in political science from the Institut d’Etudes Politiques de Paris, 1-24-08 Wider Troubles Trickle Down to Oil Sector, New York Times, http://www.nytimes.com/2008/01/24/business/worldbusiness/24oil.html?pagewanted=print As fears of an American recession ripple across the globe this week, analysts and energy experts are wondering whether the great oil boom of the last five years is finally coming to an end — or whether it is simply taking a break. While an economic slowdown might lead to lower oil demand, as consumers scale back their gasoline consumption and businesses cut air travel, some economists say this might not necessarily produce lower energy prices. Global oil supplies are tight, geopolitical tensions remain high, and producers are counting on higher prices to offset rising costs. After briefly touching $100 a barrel twice, oil prices have shed 13 percent since the beginning of the year. Crude oil futures on the New York Mercantile Exchange dropped $2.22 a barrel, or 2.5 percent, to close at $86.99 a barrel on Wednesday, their lowest level since October. Even as economic growth slows in the United States, some experts fear the world might still find itself confronted with high energy costs, a situation that would be reminiscent of the mid-1970s or the early 1990s. Despite the clouds hanging over the economy, and recent stock market losses, several energy analysts say that oil prices will average $80 a barrel this year, $8 a barrel higher than last year’s average — and nearly double the figure of 2004. US Economy – A2 HousingHigh oil prices can’t be mitigated – housing market collapse prevents consumer spending Marty Feldstein, professor of economics at Harvard University, January 2008 http://www.foreignpolicy.com/story/cms.php?story_id=4143&print=1, Seven Questions: Martin Feldstein on the “R” Word, Foreign Policy FP: Oil prices are still hovering in the $90 to $100 per barrel range, and yet everyone’s still talking about subprime mortgages. If I had told you a year ago that oil prices would hit the $100 mark, wouldn’t you have thought that was enough to trigger a recession all on its own? MF: In the post-World War II period, recessions have been preceded by a combination of increased oil prices and high interest rates. And we certainly got a dose of both of those this time. The Fed raised the federal funds rate from 1 percent to 6 percent, and oil prices tripled. So yes, I would have been worried that that combination alone, driven by the high oil prices, could have turned us down. In fact, I wrote a piece in the Wall Street Journal a couple of years ago, asking: Why did the jump in oil prices (that we had then observed—from roughly $20 to $60 a barrel) not push the economy into recession? And I answered that by saying: because there was this surge in home-equity borrowing that allowed individuals to increase their consumption faster than their incomes. I concluded by saying that if energy prices continue to increase, we cannot count on that kind of offset from higher consumer spending financed by mortgage borrowing. A2 US Economy – HousingSpill-over from housing crisis is driving US economic decline Bloomberg News, 7-17-08 http://www.bloomberg.com/apps/news?pid=20601068&sid=acA6Eu60VaLI&refer=home, U.S. Economy: Home Construction Hits 17-Year Low (Update2) Builders started work in June on the fewest single-family U.S. homes since 1991 and manufacturing in the Philadelphia region contracted for an eighth straight month, signaling the economic slowdown is worsening. Construction starts fell to an annual pace of 647,000, the Commerce Department said today in Washington. A change in New York City building codes spurred total starts, which include condominiums and apartment buildings, to a four-month high. The figures underscore the housing recession was already deepening before the financial turmoil this month at Fannie Mae and Freddie Mac threatened to further curb mortgage financing. Today's drop in the Philadelphia Federal Reserve's factory gauge showed manufacturers cut orders and employment in July as confidence in the economic outlook deteriorated. ``Hopes for a bottom'' this year in home construction ``are rapidly fading,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. The housing recession ``has been spilling over to manufacturing for months,'' contributing to ``recessionary conditions,'' he said. Housing starts in the Northeast, which includes New York, soared 242 percent in June. The city's new construction codes tightened safety and environmental standards. Examples include requiring interconnected smoke alarms and so-called ``white roofs'' to reflect heat. Changes in the tax code covering the building of affordable housing units may have also influenced the reading. ``Anyone planning to build had a strong incentive to get started before the deadline,'' Lindsey Piegza, a market analyst at FTN Financial in New York, wrote in a note to clients. Housing market meltdown undermines construction industry Bloomberg News, 7-17-08 http://www.bloomberg.com/apps/news?pid=20601068&sid=acA6Eu60VaLI&refer=home, U.S. Economy: Home Construction Hits 17-Year Low (Update2) M/I Homes inc., a homebuilder concentrating in the Midwest, Florida and the Mid-Atlantic states, said July 10 it delivered 478 homes in the second quarter, down from 755 in the same period in 2007. The Columbus, Ohio-based company said the number of new contracts fell to 530, from 688. The slump in housing has caused job losses in construction as well as in manufacturing. Payrolls at builders declined by 43,000 in June after a drop of 37,000 the prior month, the Labor Department said this month. The total loss of construction jobs since September 2006 has swelled to 528,000. A2 US Economy – HousingHousing slump is the primary factor in decreased economic growth and decreased investment Bloomberg News, 7-20-08 http://www.bloomberg.com/apps/news?pid=20601087&sid=azjsyRcw4Ag8&refer=home, Home Sales, Durables Orders Probably Fell: U.S. Economy Preview Home sales in the U.S. probably declined in June as the housing slump headed for a third year, undermining the economy and prompting businesses and consumers to trim spending, economists said before reports this week. Combined sales of new and existing homes dropped 1.3 percent last month, according to the median estimate of economists surveyed by Bloomberg News. Orders for durable goods, products meant to last several years, probably fell 0.3 percent. The biggest housing recession in a generation, now being exacerbated by a tightening in credit as financial losses spread, threatens to stall economic growth. The surge in raw-material costs and slowing demand will likely prompt companies to keep reducing investment in a bid to protect profits. ``Stress in financial markets and curtailment in lending are going to make it more difficult to buy homes,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``Manufacturers that produce for homebuilders or homeowners are being hurt by the slump in housing.'' Decreased construction and home values undercut consumer spending and economic growth Bloomberg News, 7-20-08 http://www.bloomberg.com/apps/news?pid=20601087&sid=azjsyRcw4Ag8&refer=home, Home Sales, Durables Orders Probably Fell: U.S. Economy Preview Reacting to the weak sales, builders in June began work on the fewest single-family homes since 1991, the Commerce Department reported last week. That signals that home construction will continue to weigh on the economy after subtracting from growth since the first quarter of 2006. More Americans are walking away from their homes as property values tumble and borrowing costs on adjustable-rate mortgages reset higher. Bank seizures increased a record 171 percent from a year ago and foreclosure filings rose 53 percent in June, RealtyTrac Inc., a seller of default data, said July 10. Stricter lending regulations and the drop in home prices make it harder for Americans to tap home equity for extra cash. Consumer spending in the first quarter grew at the slowest pace since the 2001 recession and is likely to keep slowing later this year, according to economists surveyed this month by Bloomberg. A2 US Economy – ConstructionConstruction industry decline curbs economic growth Bloomberg News, 7-17-08 http://www.bloomberg.com/apps/news?pid=20601068&sid=acA6Eu60VaLI&refer=home, U.S. Economy: Home Construction Hits 17-Year Low (Update2) Declines in construction probably will limit economic growth, even as tax rebates boost consumer spending. Residential building dropped at a 24.6 percent pace in the first quarter and subtracted 1.1 percentage points from growth. Fed Chairman Ben S. Bernanke this week abandoned his June assessment that the threat of an economic downturn had diminished. During testimony before U.S. lawmakers in Washington, he also said that ``upside risks to the inflation outlook have intensified.'' After stabilizing over the last nine months, builders' confidence slumped again in July. The National Association of Home Builders/Wells Fargo sentiment index dropped to 16, the lowest level since records began in 1985, from 18 in June, the group said yesterday. As property values have fallen, some homeowners are stuck with mortgages they can't afford, and that is leading to an increase in foreclosures. Bank seizures increased a record 171 percent from a year ago and foreclosure filings rose 53 percent in June, RealtyTrac Inc., a seller of default data, said last week in a statement. Directory: file -> view view -> Western Europe after wwii view -> Author study: paul fleischman view -> Qpa1 7ela study Guide view -> Arctic Oil/Gas Neg view -> November 1970 Approximately 150,000-500,000 deaths Bhola Cyclone Bangladesh view -> Grade Level: 6 Unit of Study: Caribbean glce view -> Citation: Duffield, Katy view -> Table of Contents Lesson # view -> Chinese Wind Energy Disad Download 9.54 Mb. Share with your friends:
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