- The global economy is producing far to much supply of most things, chasing to-little-demand from cash strapped consumers.
- Prices of other industrial commodities are in steep decline.
- Billions of dollars in investment capital are “risk off”.
- An untold number of jobs spread across America are at risk.
Television pundits and business writers who are relentlessly pounding the table on how cheaper home heating oil and gas at the pump is going to provide a consumer windfall and ramp up economic activity have a simplistic view of how things work.
Oil-related companies in the U.S. now account for between 35 to 40 percent of all capital spending. Announcements of sharp cutbacks in capital spending and job reductions by these companies create big ripples, forcing related companies to trim their own budgets, revenue assumptions, and payrolls accordingly.
The announcements coming out of the oil patch are…
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