Friday, September 30, 2011

Chinese slowdown may provide relief for fuel prices.

A news report last week from CNBC contained an interesting item with implications for the economy, both locally and nationally:
Copper, hit by concerns of a Chinese slowdown, tumbled 7 percent to a 1-year low.

The drop in copper prices is significant, as it may signal relief to property owners around the country that have faced relentless pressure from metal thieves.

More importantly, the reference to a "Chinese slowdown" may provide relief to the U.S. economy as a whole. If the Chinese economy worsens, China may purchase fewer resources from around the world. Chinese purchasing has provided the impetus for much of the oil price increases over the past several years. If Chinese oil purchasing declines, we may see fuel prices decline, with positive effects for the U.S. economy and the real estate market. [Actual gasoline price declines may be minimal, as runaway spending by the U.S. government might more than offset the effects of lower Chinese demand.]

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