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Could Oil Prices Indicate a Recession? – USMR Market Insights

Oil Prices Leading to a Recession?
Jun 8, 2018

In this installment of Daily Market Insights, Sales Manager Coy Wells discusses how the fluctuating prices of oil in the U.S could be potential signs of an oncoming recession.

 

Could Oil Prices Indicate a Recession? – Video Transcription

Coy Wells:               00:00

Coy Wells: 00:00 Hello, this is Coy Wells with Daily Market Insights and U.S. Money Reserve. Today we're gonna be talking about the decline in oil prices that we've seen over the course of the past couple of weeks. This is kind of important to understand, historically, when school sets out, at the end of March, we start seeing prices of oil increase at the pump and the reason we see that is because we historically know that that brings in additional revenue when everyone's going on vacation for the summertime.

Coy Wells:               00:24

New Speaker: 00:24 What we're seeing right now is we're starting to see the price of oil will be reduced and what I want you to start looking at and what I want you to start thinking about is when you start seeing the price being reduced prior to the summertime, or going into mid-summer, it historically leads to a recession. Now why would the prices of oil be decreased in the summertime when we know historically going up be an issue? Here's why: as always it's about bringing in additional revenue to the country, which is a further sign that the economy of the United States may not be as robust as it historically can be or has been during these times. Right now the price at the pump on average for the national prices, about a $2.94 and that's across the entire United States right now. What we're probably going to see over the course of the summertime opposed to prices rising, now some individuals and companies are going to raise the prices because that's what they historically do, but the price of oil, crude oil that we see on the news stations right now is coming down.

Coy Wells:               01:18

New Speaker: 01:18 So that means the price at the pump should be coming down as well. Historically, that is done when the country is in a position of low revenue. That means that we're trying to put more money into the people's pocket because if we can put more money into our pocket, we're going to spend more money and if we spend more money in retail sales and we have more money readily available to us, it spurs on additional spending and boosts up the GDP of the country. Now, if that happens, if you'll look at the historical charts of oil and if you'll study the points in times in history when the price has been reduced prior to going into the summertime, it typically leads to a recession in the following six to 12 months. If you're watching the news that we've talked about over the course of last year and a half, we've talked about a recession falling in the latter portion of 2018 going through 2019, and that's exactly what a lot of the top economist here in the United States are also forecasting. They're forecasting a recession following the latter portion of 2018 going into mid-2019 or the latter portion of 2019.

Coy Wells:               02:18

New Speaker: 02:18 The problem is most of us can never predict when a recession is actually going to take place. All we're trying to do is provide you with the best information that we have available to us in some of the signs and some of the indicators that are out there. But if you look at the historical trend in charts that the oil market has for us to be able to review, if you'll look at the charts and identify the points in times where we see a decrease in the price of crude oil prior to going into the summertime when we know that the price of oil typically rises. Okay, think about that. We know that the price of oil rises in the summertime so the government can make more money. When we see it being reduced during that timeframe, that means that they're trying to spur on and get additional revenue brought into the country, typically through retail sales. More money in pocket means we spend more money.

Coy Wells:               03:01

New Speaker: 03:01 So is a recession on the horizon? My answer would probably be yes. If you look at what we've been talking about for the course of the last six months to a year and a half, some economists, including Forbes magazine, is predicting possibly a depression and we talked about how terrible a word depression is. Can it happen? Sure it can. When is it going to happen? We really don't know, but the timeline they have given us is around 2018, mid-2018 going into the latter portion, going into the mid-portion of 2019. They are saying that it will probably happen in that timeframe, so this is just another indicator like we've talked about in the past. For more information on what we've talked about today, call the phone number to also get your free copy of the 2018 Annual Gold Global Forecast. Call the phone number on the screen and we'll send this out to you immediately and this will help you understand what we're talking about today and some of the stuff that we've talked about in the past. As always, thank you for watching Daily Market Insights.

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