This Recession, It's Just Beginning

Washington Post ^ | June 27th, 2008 | Steven Pearlstein

[RSmithOpt]

RE #73 I agree....I saw that immediately in Jeff's comments. I figure 'he' doesn't get out much from in front of the monitor other than to conduct business and go shopping and a dinner and a movie.

I know plenty of blue collar workers and believe me, they are hurting.

NC's RTP area is showing a significant downturn in the economy and housing starts. Auto dealers are trying to sell cars with 1 year's free gas based on 12k miles of driving. Plus our Dim governor and the state Dim controlled legislature with local governments see no other means of the way out for their increased costs other than to keep raising taxes. "It's for the chillzdwens.", ya know.

Personally, I am happy for Jeff's success, however, he needs to look at the big picture.

The cost of oil, energy and food skyrocketing will have a tremendous impact on this country's economy very very shortly.

Congress and the Administration are deaf to what is happening....the bank write downs and the housing bust are all they're interested in now as to 'save the banks'. Ben Ben has screwed this economy even more with a dumb move to do what he and the The Reserve did to save the banks by printing more money (lowering the rate). It's all going to make the inevitable that much more painful.

The GOP will lose the White House in November because of their being asleep at the wheel when they were in control. The RINO's made sure of that.

[AndyJackson]

Lets say the number of gallons of gasoline sold in the USA stays the same, but the price of gasoline doubles, then the amount of money people spend on gasoline has doubled. Is this increase in money spent on gasoline considered an increase in GDP? My understanding is that it is. Next... Since the cost of gasoline (energy) is not included in core inflation, the inflationary rise in spending due to the doubling of gasoline prices is not used to downwardly adjust GDP. Therefore, when gas prices soar, GDP is reported up and is not adjusted for inflation since energy is outside the core inflation.

If the government does not increase the money in circulation to pay for gas, then folks spending more on gas must spend less on something else, so gross price levels might not change.

In fact, you are correct about this in one sense. If volatile prices (oil) increases, but things making up core inflation decrease then there will be deflation on rising oil prices, and thus GDP will go up.

[dollarbull]

Bubbles are only burst when there is rising supply (tech stock bubble, housing bubble, tulip bulb bubble).

Due to peak oil, supplies will be falling over time, not rising.

There will be pullbacks, but oil will grind relentlessly higher.