China Chops Your Gas Price

October 3rd, 2011

China’s stimulus plan helped the U.S. far more than President Obama’s bloated scheme in 2009.  China really did launch “shovel-ready” projects, and firms like Caterpillar and United Technologies grabbed export orders. 

But now China’s GDP is skidding.  Is there a good side to this slide?  Yes.  It is crushing commodity prices (20% below April levels).  That means U.S. consumers will pay less for gas and have more left to spend at department stores.  I expect Walmart to report stronger Halloween shopping with oil at $77 a barrel, instead of $100.  Crashing copper prices will slash prices for pipes, while cheaper coffee beans boost Starbucks.  Cheaper corn helps cattle-ranchers — and even Halloween decorators!

A floundering Chinese economy is generally not helpful to our economy.  But right now China’s slowdown is popping a commodity bubble.  That’s the good side.  

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