Economy Now Over a Barrel

The price of oil has doubled in the last 12 months to almost $139 per barrel. The persistent high oil prices have become too much for the economy to overcome. This is a significant detriment to the previous outlook. It is a growing second wave of trouble that will sink/delay the recovery enabled by monetary policy.

I now expect the mild recession to deteriorate into a real recession. Unemployment will likely hit 6.5% by year end, and persist at a similar level into 2009. I expect a slow recovery.

Still waiting for the bottom with about 50% in cash.