At the start of 2014, financial savants issued their annual predictions with a degree of unanimity befitting a meeting of the old Soviet politburo. Interest rates were expected to rise, U.S. stocks were supposed to continue their leadership in world markets, and the global recovery was likely to push energy prices somewhat higher. A few observers found this consensus a little frightening. As late as mid-summer, the two stocks most highly recommended by Wall Street analysts were oil services giants Schlumberger and Halliburton, the latter of which was down 50% in the six months ending in mid-December.

Should the collapse in the price of oil have been as big a shocker to the financial markets as it turned out to be? For the last few years, economic think tanks around the globe have said that the emergence of the United States as a petro-nation and the development of hydraulic fracturing are game changers. Though these new technologies are being used most extensively in America, they could be applied wherever oil deposits exist.

It is too early to discern whether oil prices will remain low or whether producers will curtail supply enough to trigger a rebound.

But it’s also worth noting that per capita oil consumption in the U.S. has been declining for nine consecutive years under a wide variety of gasoline price scenarios. Next year, Cummins will come out with an engine for trucks that is 50% more efficient.

Still, as analysts go back to the drawing board and redo the calculus underlying their models, it’s worth speculating about what the implications are. For starters, it’s hard to name a major country whose economy is outperforming America’s (someday the Philippines may qualify, but not yet) and we’re not doing that great.

So if today’s American economy is the tops among the 15 or 20 largest nations, that is a sad commentary on the rest of the world. After all, 70% of Americans have seen their real wages decline for most of the last 15 years.

For many Americans, energy consumes 20% of their income. And it is good news that for the first time in a long time, they will have extra money in their pockets. So 2015 may be the first year in a long time when Main Street does better than Wall Street.

And speaking of changes, you’ll notice we’ve completely redesigned the magazine, starting with this issue, and have made big design changes on our website as well. All of us at FA hope that you find that the redesigns improve your reading and interactive experiences with us.

I hope the year is off to a good start at your firms and look forward to hearing from you throughout 2015.

Evan Simonoff
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