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Data: Energy Information Administration; Chart: Axios Visuals

The history of low oil prices juicing the U.S. economy was broken during the pandemic-fueled price collapse, Dallas Fed economists argue in a new commentary.

Why it matters: "[O]n balance this oil price decline has weakened rather than strengthened the U.S. economy, making this event different from past episodes of falling oil prices," they write.

What they found: Normally, low gasoline prices stimulate help the economy because people have more money to spend on other things, while high prices act as drag on growth.

  • But these are not normal times! "Shelter-in-place policies greatly and almost instantaneously reduce the gasoline expenditure share, thereby limiting the direct effect of lower oil prices on domestic consumers," they write.

The big picture: These tragically strange circumstances followed more structural changes over the last decade as U.S. production soared and petroleum imports declined.

  • The growth of the U.S. oil industry means that when it deeply cuts investment, which is happening now, it hits the wider economy.
  • That drag on investment "can be large enough to offset any consumption stimulus" from low prices.
  • Meanwhile, in most other industries, the downward pressure on production costs from low prices is actually quite small.

The bottom line: "In the current environment, the sharp reduction in capital expenditures by oil companies explains why this oil price decline, on balance, actually hurt U.S. investment spending — and hence, economic growth — not only in oil-producing regions, but overall."

Go deeper: EIA forecasts U.S. oil boom will reverse amid coronavirus disruption

Go deeper

Dion Rabouin, author of Markets
Aug 18, 2020 - Economy & Business

The American real estate conundrum

Reproduced from CivicScience; Chart: Axios Visuals

The housing market has been a solidly bright spot in the U.S. economy in recent months.

Yes, but: There remain serious questions about what the next phase for the market will be as the coronavirus pandemic has created an enormous amount of uncertainty about where and how people will live.

Birx: Trump White House could have reduced COVID deaths by 30 to 40%

Deborah Birx, then-coronavirus response coordinator, speaks during a news conference in the White House last November. Photo: Chris Kleponis/CNP/Bloomberg via Getty Images

Deborah Birx, the White House COVID-19 response coordinator under former President Trump, told a House subcommittee this month that the Trump administration could have prevented tens of thousands of deaths during the early stages of the pandemic.

Driving the news: "I believe if we had fully implemented the mask mandates, the reduction in indoor dining ... and we had increased testing, that we probably could have decreased fatalities into the 30% less to 40% less range," Birx said in closed-door testimony to the Subcommittee on the Coronavirus Crisis, according to excerpts provided by the panel.

Study: Fear of debt keeps Latinos out of college

Illustration: Aïda Amer/Axios

Fear of never being able to pay off school loans is keeping many young Latinos in the U.S. from going to college or completing a degree, according to a report published in September.

State of play: Latinos tend to have more difficulty repaying school debt than white student borrowers, according to Federal Reserve data, at the same time that they need more loans in order to afford tuition.

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