The United States economic slowdown has become so severe it is now effecting oil demand.
Oil prices today fell below $118/barrel, the result of American consumers cutting back on how much they drive. In July oil prices hit a record high of $147.27 due to overseas demand in China and India.
The high price of oil, combined with the American recession, unemployment, and people in general trying to cut back on their driving is resulting in a significant drop in oil demand.
The recession is hurting the automotive industry, including General Motors which has announced $15.5 billion in losses so far in 2008.
Whether General Motors near bankruptcy is a sign that America's economy is collapsing has yet to be seen.
The US dollar's value dropped 20% during 2007 during which time the US growth in GDP fell to only 3% (which effectively means the US economy shrunk 17% in 2007).
Part of America's financial woes is a huge trade deficit with China. China is flooding the United States with cheap products and Americans, who are obsessed with buying things on credit, are going in debt because the American economy lacks manufacturing jobs to pay for all the things they buy.
Barack Obama, if he manages to take the presidency, would be wise to raise tariffs on Chinese imports to the USA.
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