Oil and the US consumer will determine how this global growth story ends

The oil price surges past $50 a barrel, fears mount that Asian central banks will cease to pile up dollar securities – and the dollar duly falls, pulling equity markets down with it.

So what is new? Well, in one sense, nothing really. The last few days have seen a return to the jitters of late 2004. After several months of relative dollar strength, a slightly weaker oil price and strong share prices, we are back to the same concerns that dominated the markets then. These include the US current account deficit and how it is being financed, the low American savings rate and the dependence on consumer borrowing, the nascent inflationary pressures and the rising interest rate profile.

Independent