Oil Prices Impact Gross Domestic Product

Federal Chairman Alan Greenspan predicts the rise in oil prices in 2005 will reduce our nation�s gross domestic product (GDP) growth by 0.75 percent.  Given that our economy is approximately $12 trillion in size, that reduction is equivalent to $90 billion.  The price of a barrel of oil has gone from $43.45 on 12/31/04 to $60.57 at the end of July 2005, an increase of +39 percent year-to-date. 

(Source: Federal Reserve, Commerce Department, NY Mercantile Exchange.)