Federal Reserve Chair Janet Yellen raised more than a few eyebrows in a Mar. 29 speech by highlighting oil prices at less than $30 per barrel as a development that "would tend to restrain U.S. economic activity."
While lower oil prices bring about a front-loaded hit to growth — as energy-producing firms respond by curtailing investment and employment — the net effect of lower oil prices was expected to be positive, with a lag. After all, cheaper fuel prices are considered a form of stimulus for the U.S. consumer, the largest segment of the economy. And despite the shale revolution, the U.S. remains an oil-importing nation.
