Recent data show that the economy rebounded with an annual growth rate of 2 per cent in the first quarter of 2001 as aggregate demand fuelled by consumer spending contributed to this performance. Lower commodity prices which are now emerging at the beginning of 2001 represent one channel through which the United States ‘slowdown’ may impact the domestic economy.
For every $ per barrel fall in the price of oil, government’s receipts from the energy sector will be lower by $ million. However the budget for fiscal 2000/2001 was based on an average oil price of $ per barrel and prices are unlikely to fall below $ for the remainder of the fiscal year.