* “Say what you will about the various causes of past U.S. recessions, but economists at HSBC offer a sobering observation. Since the 1970s, a doubling of the real price of oil, which is the oil price relative to overall inflation, within the span of a year has almost always been followed by declining GDP. The two exceptions are the 1990-91 recession, when prices spiked but did not quite double, and 1987, when prices did double, followed by slower growth but no recession. Today, a doubling would require prices to rise to about $150. <\/span>“<\/p>\n * “Looking across the global economy, separate studies at Morgan Stanley and Barclays Capital do not suggest a total derailment of the global recovery, but do imply a serious bout of 1970s-style stagflation, a combination of sluggish growth with high inflation. The Barclays analysts conclude that a rise to $150, if sustained at that level, would cut global growth by about 0.75 percentage points, while adding as much as 3 points to global inflation. Morgan Stanley, using a different approach, would expect a 1 percentage point loss of growth and 1 additional point in inflation as result of oil at $140. The global economy, including fast-growing emerging markets, is generally expected to grow about 4 percent this year; it is said to be in a recession when growth dips below 3 percent.”<\/span><\/p>\n * “The big worry right now is the combination of inflexible fiscal policy and still-fragile credit markets, say the HSBC analysts, especially in developed economies. Their government budgets are already stretched and unable to offer much support in case of a recession, and their economies may not yet be strong enough to withstand the higher interest rates that central banks might use to keep inflation under control. That means a spike in oil prices could not come at a worse time, and once again the global economy is at the mercy of its oil supplies.”<\/span><\/p>\n What does this mean for the Enterprise Storage business? It is hard to tell, but if IT folks find their budget tightening, we hope they will consider our affordable support <\/a>for their NetApp equipment as one way to save on their storage infrastructure.<\/p>\n The linkages between oil prices and our little niche of enterprise storage may seem obscure, but in a global marketplace a small disruption or price fluctuation can cause unexpected anomalies in the supply chain of energy, production and information storage. … Continue reading 