Oil Price Drop Should Boost Economy

Crude oil has declined over $35 from it's mid July all time highs. It is estimated that each $10 reduction in the price of a barrel of oil translates into an additional 0.1% of economic growth (or roughly $14 billion of added growth in dollar terms). Based on current prices, the recent decline in oil would add 0.35% of growth to the economy, or almost $50 billion in additional economic growth. Think of it as another stimulus plan to help spur the economy, but hopefully of a more permanent and durable nature than the government stimulus put forth earlier this summer. FYI, the chart above serves as a reference on recent quarterly economic growth trends.