Richard Carnes: Gas prices mean diddly squat
“Dude, gas is under two bucks!”
I turned my head his direction, not to acknowledge the insight, but to see if he was serious.
“What planet are you from?” I asked, truly curious.
“OK, well, maybe not around here, but I just saw it on Drudge! Dude, it means the economy is back!”
I didn’t realize it had gone anywhere.
“Yeah, with gas back where it belongs, car sales and everything else will catch up in no time and we can get back to our normal lives!”
Ignoring whatever he meant by gas “belonging” somewhere and in fear of his definition for “normal,” I continued, “How, or better yet, why, do you equate gas prices with the state of the worldwide economy?”
He cocked his head a little to the right, like a newborn puppy watching a ball roll across the floor for the first time in its life.
“Um …” was all he could manage. The longer he pondered the question, the more fearful I became of witnessing a cranial-rectal inversion.
It is this type of attitude, and the associated levels of ignorance, toward our economy that never ceases to amaze, especially when it involves overly simplistic analysis of singular items or issues.
Show me one person who is going to spend more dollars this holiday season solely due to the price of a gallon of gas being lower today than it was last month, and I’ll show you an individual who knows how to fill out unemployment forms while standing in line at the local food bank.
If I didn’t know better, I’d swear our myopic fiscal vision has no foresight.
Jobless claims across the country have hit a 16-year high, and consumer spending, which accounts for two-thirds of all economic activity, is measurably worse than right after 9/11.
Retail inventories are high because nobody’s buying stuff. Wholesale inventories are low because manufacturers can’t get the credit to hire the people to make more stuff. Auto sales are almost half what they were just a year ago, and consumers are telling the Big 3 where to stick their stuff.
Home prices continue to sink while the sales of new homes are at their lowest level since George Bush Sr. was in office.
Yet because of a temporary dip in the price of oil, sales of Hummers are suddenly expected to rise like a phoenix from the auto ashes?
Excuse me, but somebody needs a big long strip of mental floss.
The markets just finished their first positive week in months and best overall week since 1984, yet are still down around 40 percent for the year, effectively erasing over $10 trillion in personal wealth of Americans since last Christmas.
For perspective’s sake, that amounts to about $250 million for every man, woman and child (both legal and, um, not so much) of Eagle County.
That’s a whole lot of Epic Passes.
The point being that it has taken decades for the credit crisis, which supports the true foundation for this worldwide economic collapse, to reach its fiscally dilapidating conclusion, and will take at the very least a few years to make it back to “even.”
Only then can we happily return to our overindulging ways. In the meantime, quick dips in oil prices should not be used as rationalization for any naive changes in spending habits, especially those who have trouble understanding the differences between an Escalade and a Smart Car.
NOTE: The preceding opinions belong to Richard and are not necessarily shared by this newspaper, but for the sake of personal financial stability, he thinks they should be.
Richard Carnes of Edwards writes a weekly column for the Daily. He can be reached at email@example.com.