THE QUARTER IN BRIEF
The last quarter of 2014 brought more volatility to the stock and commodities markets. The S&P 500 and Dow both gained more than 4%, outperforming quite a few of the major foreign indices. Oil prices took a dive, along with prices of other key energy futures. The pace of home sales slowed and year-over-year home price gains grew smaller. Tumbling energy shares and a pandemic exerted more strain on equities than the end of QE3. New economic worries arrived for the European Union, Russia and Japan. Our economy looked solid, showing less unemployment, more consumer spending and impressive growth.1
DOMESTIC ECONOMIC HEALTH
America was clearly getting back on its feet economically. Unemployment declined only 0.1% between September and November, but at 5.8%, November’s jobless rate was down 1.2% year-over-year. (The overall jobless rate, or U-6 rate, dipped to 11.4% in that month.) Job creation really picked up in fall: there were 243,000 new hires in October, 321,000 in November. Hourly earnings rose 0.4% in November, indicating decent wage growth at last.2
How long will it last? Who wins & loses from it?
On the New York Mercantile Exchange, a barrel of light sweet crude is currently worth well under $60. Prices have dropped more than 25% in a month and almost 45% year-over-year. What is behind this freefall? How long will prices keep dropping, and who does this development hurt and benefit?1
Oil prices haven’t cratered simply because of lessening demand. Make no mistake, waning demand is a major factor – and in its latest 2015 forecast, the International Energy Agency projected global demand for crude weakening further. But this is just part of the story.2