Sunday, January 06, 2008

Prediction: $4 Gas by Spring

There are a number of reasons why economists worry about an impending recession. This might be a real contributor to that concern. How will the nation react? Will consumer behavior change as a result?
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3 comments:

s said...

Will behaviour change? Hell yes!

The credit crunch will stretch beyond mortgages; you've got your blood, your turnips, and not much more.

It won't make sense to gas-up the SUV for a $10 a gallon to drive to the McJob which generously pays an above minimum wage of $8.50 an hour. People are gullible, but they are going to smell a skunk when it is a net loss to work. The only solution will be inflation, but interest rates are artificially low, to improve liquidity.

If inflation is 8%+ and the US bonds are selling for 3% (and the local bank's money market rate is the same) a Big Mac is a better investment than any alternative, at least you haven't lost anything by eating it.

Stagflation?

January 6, 2008 at 5:29 PM
Anonymous said...

If American's have not changed thier behavior with $3 gas, I am not sure what $4 gas will do..
I guess there must be some level that will have an impact, but I do not know where that is.

January 6, 2008 at 5:34 PM
GreenhillsDem said...

Anonymous -

That is my fundamental concern. For better or worse, there will need to be a tipping point, but at this point, we aren't seeing it.

January 6, 2008 at 5:47 PM

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