The Big Picture looks at the economic fall-out for the US:
Federal deficit spending will certainly rise by tens, and maybe hundreds, of billions as emergency appropriations are directed at larger and larger efforts to clean up this mess. At the same time, federal and state revenues tied to Gulf-region businesses will fall.
We expect that the Federal Reserve will extend the timeframe that we have come to know as the “extended period” in the making of its monetary policy. We do not expect the Fed to raise interest rates at all for the rest of this year, and maybe well into next year. We expect to see the deterioration of the economic statistics for the US to reveal the onset of this oil-slick crisis in May, and the negative impact will intensify during the summer months. A “double-dip” recession probably has been made more likely by this tragedy.
Now that I think about it, isn’t it strange we haven’t had our own off-shore rig disaster off Northland? Shouldn’t the 90s National government have scrapped all the safety regulations on the rigs to ‘make them more efficient’? How’d we dodge that catastrophe?