Whole economic and social structures
There may be a bigger problem that lies ahead, however. In several sovereign nations, the energy sector is owned and managed by the government. Iran, Russia, Libya, Nigeria and Venezuela all have whole economic and social structures that are dependent on a steady and abundant stream of petro money. Saudi Arabia, for all its bluster, doesn't fall far short of this failing either.
With the passage of time, some of these nations may no longer be able to pay their bills. Worse yet, they may not be able to meet their international debt repayment obligations. Similar to the 2008-09 credit crisis, the resulting damage to the banking sector will threaten to spill across borders. With that scary exception, lower oil prices leading to bargains at the gas pump are a huge stimulus for consumers and business enterprises. They're like a big tax cut or large pay hike. In this context, let's look at some of the other major statistical announcements recently.
(1) The World Bank has just released its latest country-by-country gross domestic product (GDP) growth projections. "Real" (i.e., inflation-adjusted) global output is expected to rise by 3.0% in 2015 after an estimated 2.6% increase in 2014. Many emerging nations are being hurt by weaker commodity prices. The U.S. 2015 forecast has been revised higher to +3.2% from +3.0%, after an estimated +2.6% was achieved in 2014. Last year estimates and this year forecasts for several other regions and countries are as follows: the Euro-zone, +0.8% and +1.1%; Japan, +0.2% and +1.2%; the United Kingdom, +2.6% and +2.9%; and Russia, +0.7%, then a bleak -2.9%.
(2) U.S. total employment in December climbed by 252,000 jobs versus November. The annual increase was 3.0 million jobs, accounting for a year-over-year percentage change of +2.1%. The most recent unemployment rate fell to 5.6%, the lowest in more than a half dozen years. The construction sector added 48,000 jobs in the latest month, for an annual increase of 290,000.