Will falling oil prices provide a boost?

Position:Economics - Brief article

"Oil exploration and extraction companies, as well as the companies that supply them, are definitely feeling the impact of the lowest oil prices since 2009. These companies, while reluctant to completely shutter operations, are being forced to trim payrolls to contain costs," says John A. Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas, Inc., Chicago, Ill.

"While oil-related companies will see profits slide, the net impact of falling oil prices will likely be positive for the economy as a whole. Some economists are estimating that gross domestic product could see a 0.5 percentage point boost from low oil prices. Meanwhile, companies that are big users of oil, such as transportation firms, airlines, and manufacturers of plastic and paint products will see higher profits thanks to cheap oil."

In a survey by the National Association for Business Economics, 50% of in-house corporate economists indicate that falling oil prices already have had a positive impact on their firms. However, inexpensive oil does not yet appear to be helping...

To continue reading