PNC Financial Economist Gus Faucher says oil prices will settle down in the early part of 2015 around $70 a barrel. Leah Duncan reports.
The benefits of cheap oil having its impact on the US economy, as third quarter GDP roared at a five percent pace, the fastest since 2003. Even investors are heartened, pushing the Dow Jones above 18,000 for the first time. Consumers are spending, companies are exporting and businesses are finally investing. SOUNDBITE: BOB JOHNSON, DIRECTOR OF ECONOMIC ANALYSIS AT MORNINGSTAR (ENGLISH) SPEAKING: "We've had a couple of really good quarters. But keep in mind that it was helped by the fact that we were actually down in the first quarter so some of that is bounce back. But clearly some of it is because the consumers are finally feeling confident enough to spend some more money." And consumers in particular are reaping the benefits of cheap oil: they pay less at the pump and a have a few more dollars to spend elsewhere. And this trend is expected to continue into 2015. SOUNDBITE: GUS FAUCHER, SENIOR ECONOMIST AT PNC FINANCIAL SERVICES GROUP (ENGLISH) SPEAKING: "I think we'll see things settle down sometime in early 2015 around $70 a barrel. Down substantially from where it would have been a year ago. So I think overall a big net positive for the U.S." But, there are some headwinds that could hold back the economy from a breakout year. SOUNDBITE: BOB JOHNSON, DIRECTOR OF ECONOMIC ANALYSIS, MORNINGSTAR (ENGLISH) SPEAKING: "I do caution that housing is still in the doldrums and business spending doesn't look so hot. And imports and exports won't be the most wonderful things next year. So, I'm not one of these people to say it's four, five percent from here on out. In fact I think we'll be back under three percent in the fourth quarter." Nevertheless, economists say the fundamentals are in place to keep the market rally going through the rest of 2014 and into 2015.