Just when you thought the climbing oil prices would drag our economy and stock market down to the abyss, it turns out the dark clouds might have a silver lining after all.
The big buzz in the financial world?
WTI crude oil’s jaw-dropping leap of 17%, hitting a staggering $91 a barrel.
Most of us, (yes, you and me included), believed that when oil prices soar, our wallets shrink and our stock market plummets, right?
Before you cry foul, listen to this: While the Fed has been chilling on interest-rate hikes, thanks to a dip in broader inflation, guess what happened?
Consumer demand stood strong.
Even with the haunting specter of a recession looming over, retail sales in August shot up 2.5% from last year.
But here’s the juicy part: Just because the S&P 500 has dipped about 3% since August (coinciding with the oil price hike), doesn’t mean the two are dance partners.
Julian Emanuel, the genius strategist from Evercore, drops a truth bomb: “Correlation is not always causation.”
The stock market’s stumble may not be oil’s fault after all.
Now for a mind-bending twist from the history books.
Between 2010 and 2014, while oil prices skyrocketed from a humble $70 to an eye-watering $100 a barrel, the S&P 500 didn’t crash and burn.
Instead, it soared by about 50%.
Higher oil prices sometimes go hand in hand with a booming economy, rocketing consumer demand, and swelling corporate profits.
During that period, not only did the economy grow, but consumer confidence also made a giant leap.
The truth is, when oil prices rise, it can mean more jobs, better incomes, and a nation full of people confidently swiping their cards.
Yes, a heftier oil price can be a burden, but it could also hint at a thriving stock market.
So, next time you see the oil price meter ticking up, remember: It’s not all doom and gloom.
In fact, it could be a sign of greener pastures ahead.