Lower oil prices failing to bring usual benefits to US economy

Washington

IT HAS been a truism of the US economy for decades: When oil prices rise, the economy suffers; when they fall, growth improves. But the drop in oil prices in the last two years has failed to deliver the usual economic benefits.

As oil prices fell to levels not seen since 2003 - sagging below US$27 a barrel on Wednesday before rebounding to about US$30 on Thursday - many pundits now say they do not expect lower prices to bolster the US economy significantly in 2016.

"We got this wrong," John Williams, president of the Federal Reserve Bank of San Francisco, told an audience in Santa Barbara, California, this month.

Lower oil prices historically were a cause for celebration in the developed world, including the US. The effect was akin to a tax cut for consumers who could fill their petrol tanks for less money. And since much of that oil was imported, the …