The Economy Is Issue Number One!

It's Friday, 4:45 And It Looks Like The Price Of A Barrel Of Oil Will Close At $139 And Some Odd Cents.

Wall Street plunged Friday, taking the Dow Jones industrials down nearly 400 points as oil prices shot up more than $11 and neared $140 a barrel - and wiped out investors' recent optimism about the economy in the process.

The prospect of higher energy prices that could cripple consumers and worsen a suffering economy had investors frenetically pulling money out of stocks.

Crude oil has seen a huge rebound this week after falling amid a drop in demand for gasoline. The jump continued Friday; light, sweet crude set a high of $139.12 in after-hours trading on the New York Mercantile Exchange after settling at $138.54, a gain of $10.75 in the regular session.

The surge followed a Morgan Stanley shipping analyst's prediction that would reach $150 a barrel by July 4; a decline in the dollar and fresh tensions in the Middle East added to crude's advance.

The soaring price of oil has intensified the market's worries that ever-expensive fuel will lead consumers to curtail their spending on nonessentials. With gasoline at the threshold of a national average of $4 a gallon, crude's surge higher is expected to propelling gas even higher - and make Americans even more reluctant to spend.

This spike in energy prices came as the Labor Department said the nation's unemployment rate jumped to 5.5 percent in May from 5.0 percent in April. It was the biggest monthly increase since February 1986 and the rise leaves unemployment at it highest level since October 2004. Wall Street had predicted an uptick to 5.1 percent.

The number of U.S. jobs shrank by a smaller-than-expected 49,000, but that development offered Wall Street little solace given that May marked the fifth straight month of jobs losses.

The sudden rise in oil prices appeared to weigh most heavily on Wall Street. The jump in oil also came after an Israeli Cabinet minister hoping to replace Prime Minister Ehud Olmert was quoted as saying Israel would attack Iran if it doesn't abandon its nuclear program.

At Car Concerns Consulting the biggest Red Flag right now is oil and it's potential for a stagflationary environment. Stagflation occurs when stalling growth accompanies rising prices. If we aren't there already, we are so close.

According to preliminary Car Concerns calculations, the Dow Jones industrial average fell 394.64, or 3.13 percent, to 12,209.81.

Can You Spell...RECESSION?

Broader stock indicators also fell sharply. The Standard & Poor's 500 index lost 43.37, or 3.09 percent, to 1,360.68, and the Nasdaq composite index fell 75.38, or 2.96 percent, to 2,474.56.

Button-Down the hatches!


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