Still low energy prices continue to hammer away at overall U.S. economic output. According to Deutsche Bank chief U.S. economist Joseph LaVorgna, the overall energy sector accounts for roughly four percent of gross domestic product and less than two percent of employment. By his definition, the energy sector includes utilities, oil and gas extraction, petroleum and coal products, and pipeline transportation.
Because of its size relative to the overall economy, many analysts presumed that reduced investment in the energy sector wouldn’t come to represent a major threat to the broader economy. But as pointed out by writer Lisa Beilfuss, turmoil generated by lower prices could impact gross domestic product far more than anticipated. Capital spending per employee is much higher in the energy sector than in other economic segments.
During the first three quarters of last year, reductions in energy industry capital spending shaved an average of nearly zero point six percent off GDP growth. During last year’s third quarter, total energy-related capital investment was below ninety three billion dollars, approximately halved from a year earlier.
