President Donald Trump on Wednesday touted falling oil prices as a “tax cut for America and the world,” but economists say the shale revolution, which has turned the U.S. back into a major oil producer, means that declining crude prices are now a small headwind for the economy.

“The key point to remember here is that the lower oil prices are now a net drag on the U.S. economy, because the [capital-expenditure] cutbacks triggered in the shale oil business outweigh the gains to consumers’ spending from cheaper gas prices,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Monday note.

The drag isn’t large, but the phenomenon is a “huge break from the past,” Shepherdson noted, and it’s become visible only recently.

Read:How plummeting oil prices will affect drivers over Thanksgiving

Shale output has risen sharply over the past decade, pushing U.S. oil production to a record above 10 million barrels a day in 2018.

Oil on Tuesday extended a rout that’s already pushed futures on the U.S. benchmark, West Texas Intermediate crude US:CLF9, and the global benchmark, Brent crude UK:LCOF9, into bear markets this month. January WTI futures and Brent both dropped nearly 7% in Tuesday’s session. Oil bounced higher on Wednesday, while stocks also attempted to recover from an extended rout that took the Dow Jones Industrial Average DJIA, +0.19% and the S&P 500 SPX, +0.29% into negative territory for the year.

Oil’s plunge doesn’t spell doom for the U.S. economy, which was already expected to slow as the boost from tax cuts faded, Shepherdson said, but the slide “will make a difference, at the margin.”

Archive: Here’s why oil rout is hurting the global economy instead of helping

He pointed to the oil selloff that began in mid-2014, taking crude from around $107 a barrel to a low near $26 in early 2016 — a move that was accompanied by a sharp slowdown in U.S. gross-domestic-product growth and an outright contraction in manufacturing activity, triggered by a 60% peak-to-trough collapse in mining capital expenditures.

That’s unlikely to be repeated this time around, Shepherdson said, but he warned that investors should expect to see a clear drop in mining capital expenditures, or capex, which include oil, in the first quarter — a move likely to be signaled by a decline in the Baker-Hughes oil-rig count — before the end of this year. The rig count is viewed as a real-time proxy for capital spending (see chart below).

Pantheon Macroeconomics

Shepherdson noted that nonmining capex also slowed sharply as oil prices plunged in 2014 to 2016, a phenomenon he said was likely due to the hit other sectors, including parts and equipment makers, transportation and logistics firms and even real estate and finance in parts of the country heavily dependent on oil output, took as mining capex collapsed.

That’s also unlikely to be repeated this time around, he said, because the non-oil economy is in much better shape, with very strong cash flows.

Still, Shepherdson intends to keep a close eye on the capex intentions index in the National Federation of Independent Business’s monthly survey. It isn’t a perfectly reliable gauge, he said, but is the single best leading indicator of the rate of growth of nonoil capex, usually signaling turning points a couple quarters in advance. That means a significant decline in the index “would be an unambiguous reason to worry about a slowdown in growth next spring.”

Meanwhile, of course, many consumers will directly feel the benefit of lower gasoline prices, which are coming at “exactly the right time” for retailers ahead of the start of the holiday shopping season, Shepherdson said.

Chain-store sales have been strong in recent months as a result of tax cuts and a delayed response to last year’s dollar weakness, which raised the cost of imported goods, he said. Now both effects are reversing, putting holiday sales at risk.

But even there the upside is limited, Shepherdson said, warning that while lower gas prices will “flatter” sales numbers over the holiday season, consumer cash flow isn’t strong enough to maintain the near-4% real growth in spending over the second and third quarters.