Futures brokers and investors looked for safe havens on Monday morning, as the dollar rose amidst continued bad news about the economy. U.S. gross domestic product grew at an annual rate of just 1.6 percent in the second quarter, and personal disposable income fell.
The news battered stock indexes and crude oil futures – West Texas Intermediate light, sweet crude oil futures for October delivery dropped nearly 1 percent to trade at $74.48 per barrel.
“You do have a lot of evidence that the economy is just stalling,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, told Bloomberg News. “Policy makers are all making a brave face and saying we’ve got plenty of tools available, but I’m starting to think they’re running out of tricks.”
Part of the fall is attributable to the major run-up in crude oil prices last week, which was driven by supply concerns from OPEC.
If the U.S. economy slips back into recession, as many crude oil futures brokers and traders seem to fear, consumption of oil and gasoline will likely decrease. In a recessionary environment, less commuting, fewer vacations and decreased production all cut into energy consumption.
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