USA Economy

Gadabout is concerned about the economy since all the talking heads are raising concern over the war, fuel prices, home loans, stocks and bond markets and hurricane season. There seems to be a shortage of good news out and about. So Gadabout wonders if bad news is impending, or are we just complaining and driving our economy into ruin by worrying and running for cover?

Back to school buying may be weak this year, which I find strange since we have a growing population.

Housing is a mess with a glut of properties vacant, which I find strange since we have a growing population and Americans trend to live alone more and more.

The war has lost its luster, but signs of success are popping up here and there.

We are approaching the peak of the hurricane season, but have yet to be hit by a single storm.

Gadabout may have to concede that all is not well in America for the simple reason that I am told so. What do you think? Are storm clouds on the horizon?

$3.25 For A Gallon of Gas? Who Really Cares?

Gadabout doubts, very much, that current fuel costs are a hindrance to the economy. A critical look at the numbers does not add up to a crisis, as we are being told on the nightly news, and I am determined to expose this rouse.

First off, gasoline is cheaper today, adjusted for inflation, than previous historical highs. In other words, we have seen these prices before. Secondly, the ratio of fuel costs compared to household incomes is at near lows. This means we are making a lot more money today than at other times in the past when confronted with high gas prices, and therefore have extra funds available for discretionary spending. Lastly, we are driving vehicles that achieve greater fuel economy. Many may disagree with this last point, but if you take a look at your personal car ownership over the years, I think you’ll see my point.

Central to the points made above is the vivid, yet unnoticed, point that SUPPLIES are not in short demand. During the OPEC oil embargo of the 1970’s, the country was out of gas. There were long lines at the pump, closed gas stations and we were in a deep recession. It was a bad time in history. Conversely, today we have moderately high prices, but have plenty of supply. The country has a healthy strategic reserve, growing alternatives such as ethanol, and oil fields that are still ripe for harvesting. It has been said that we’ll run out of oxygen before the world runs out of oil. That point is up for debate.

If the average family consumes 30 gallons of gas a week, then that family is spending $30 per week more on gas today than last year. A carton of cigarettes costs over $30. A bottle of whiskey is $20. Two DVD’s at Target goes for over $30. Is there really a problem? Some very low income families may be faced with burdens if they were to lose $30 dollars of income—no doubt about it, but this is most likely a relatively small portion of the population.

Furthermore, many Americans live in big cities and rarely drive cars (if they even own a car)! There is a population trend back to urban and semi-urban areas occurring at this time in our history. The days of suburban lifestyles appears to have peaked, highlighting that many families are fatigued with long commutes and a lack of desired cultural activities. This trend will likely reduce fuel consumption in future years.

As far as holiday driving habits go, $3.25 per gallon gas will not affect planning. If a family plans a 1,500 mile round trip over an extended holiday weekend, 83 gallons would be burned (using an 18 mpg benchmark). That trip adds up to $270 for gas, and is only $83 dollars more than last year. If $83 is a showstopper for a vacation budget, it might be best to buy a case of beer, hotdogs, hamburgers, and just hangout at the homestead.

National Piggy Bank Day—June 19, 2007

Economic Explosion

A penny and dime
Dropped in piggy bank
Converts to savings

Gadabout has devised a plan to pump up the national economy through increased personal savings. As you might already know, Americans don’t save much money—at least that is what we are led to believe. To counter this negative trend, Gadabout is announcing the first annual “National Piggy Bank Day” where Americans are encouraged to deposit their change from piggy banks, change jars and ashtrays into checking and savings accounts. Gadabout believes this will add liquidity and stimulus to the economy that can be utilized to upgrade our country’s infrastructure, increase funds available for lending to buy homes and automobiles, and pump up the savings rate for a healthy economic outlook.

As always, Gadabout has done the research, but let’s not get bogged down with details. Instead, just take my word on it and let’s start saving cash and propping up our economy for future generations. Most American households keep a change jar of some sort. This is a fact. In fact, most individuals keep an extensive amount of change that is usually converted to dollars at grocery stores, redeemed in the form of a cash card or hard dollars discounted via a 20% fee. Forget the cash cards and don’t be robbed of 20% just because it is too inconvenient to roll loose change. Many banks and credit unions have change counting machines installed in certain locations that are free of charge where deposits flow directly into established accounts.

How much “change” is out there? Well, a friend of mine keeps a big Tupperware container for his change and he recently cashed it in for over $1,000. That is real cash! I personally keep change in a metal scotch whiskey packaging container and it holds about $300. Parents often give their children piggy banks to learn the fine art of savings, and often there is mega bucks resting peacefully within its belly. How about ashtrays in cars? Just about everyone keeps change handy in ashtrays.

Gadabout estimates that there is about $25 in loose change for every man, woman and child in this country resting "in state" at any moment in time. This excludes coin collections and dollars stashed under the mattress. Since the population is over 300 million (excluding nonresidents), that amounts to $7.5 billion in cash available for immediate deposit. That is real money, folks!

If you want to teach children how to save take them to the bank and deposit that $$$ into a savings account. They will receive monthly statements and watch their savings grow with interest over time. This might motivate them to work, save and continue to invest. It is the right thing to do. Support National Piggy Bank Day this year, and invest in America.

“Record gas prices are great news for U.S.” Gadabout Jack Challenges This Opinion

This was the title of this Sunday’s Op Ed by Andres Oppenheimer, of the Miami Herald. Gadabout Jack says, Maybe, but Andres has the argument overly simplified and framed under a dim light. Andy (may I call you Andy?) believes that $4.00 per gallon gas is some sort of a magical number that once reached will magically shift consumer spending habits. He also asserts that if Americans don’t reduce their wasteful habits, we'll continue to grow evil “petro-dictators” like our fine friend Hugo Chavez. Andy's thesis is heavily weighted upon the increased numbers of trucks and SUV’s on the road compared to distant years.

While Gadabout firmly believes higher fuel costs will pressure consumption rates down, but he also believes Andres is off base and nonsensical. To make my argument clear let’s look at some nifty facts:

Facts:

The driving population in America continues to grow. America is growing and adding to the population.

The light trucks and SUV’s of today are more fuel efficient than the automobiles of the past—by a wide margin.

The station wagons of the 60’s and 70’s were considered CARS.

America refuses to drill off its coasts and ANWR. Proportionately, our domestic production decreases because of this.

In today’s society, both spouses are active in the workplace, which increases fuel consumption.

American’s solve problems by throwing money at our problems, and we have lots of money.

Propositional Phrases (that indicate relationships):

Higher prices at the pump result in lower consumption.

Higher prices at the pump result in higher prices for commercial services.

Higher prices at the pump result in less consumer consumption in other areas.

Higher prices at the pump result in an increase in sales of high efficient autos.

Higher prices at the pump will increase pressure for higher domestic production.

Higher prices at the pump will increase demands for nuclear, coal, and alternative fuel sources.

Gadabout believes that evil petro-dictators will always be around, so long as there is a “valuable resource” controlled by a non democratic government. Someday, the world may very well be oil independent, but there will always be a “resource” controlled by a dictatorship, or other form of government controlled by very few. This is why America attempts to spread democracy around the world. So, Andy, is $4.00 gas really the motivator, or is it global governance structures? Have you been listening to phrases like “Free Trade” and such? I’ll spell it out for you, evil governments cause global problems.

This is what will happen as the price of fuel increases—we’ll have higher inflation! America will always get what it needs for prosperity and growth, because America is the strongest economy on the planet. As far as Chavez goes, the likes of him come and go. Chavez types leave dirty specks and smudges in the annals of time, and are soon forgotten after they die. America will figure out this oil question in due time. Start believing in yourself, America!