Killer Combo of High Gas, Food Prices at Key Tipping Point

[Purveyor]

The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners.

Johnson looks at the percentage of income consumers are spending on gasoline and food as a way of gauging how consumers will fare when energy prices spike.

With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers.

"Energy is not quite as essential as food and water, but is a necessity in today's economy, and when gasoline costs more than bottled water—like now—then it takes a huge bite out of disposable spending," he said, in a research note.

MORE...

http://www.cnbc.com/id/42704213

[Name removed]

1. Deleted message

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[roamer65]

19. People who would rec it if George Bush were in office.

They deny to recognize that monetary policy has not changed one bit from Bush to Obama and excessive currency creation leads to inflation...regardless of who is in power.

We are in 3 wars right now and have had no appreciable tax increases. The money to pay for them has come from currency creation and we will all now pay through the hidden tax...also known as inflation.

[coalition_unwilling]

32. Small point on terminology: 'currency' is the physical manifestation

of money, i.e., paper bills and metallic coins. 'Currency creation' is the act of creating said currency. I think what you actually mean is 'excessive increases in the money supply'.

Actually, the funding to pay for the 3 wars comes from deficit spending, not from increases in the money supply. That deficit spending is enabled by the government issuing debt, i.e., borrowing, in the form of Treasury bonds, bills and notes.

Increases in the money supply, by contrast, occur when banks (be they local, national or members of the Fed) lend more money to consumers, businesses or the government.

This thread should be rec'ed, though, just for increasing people's understanding of how economies can shift from limited growth into contraction when the increasing costs of one or more essentials, like food and energy, cause people to cut back on other spending.

[femrap]

37. Loss of 'Purchasing Power'.....the

biggest 'Tax' of all.

Serfing, USA

[CoffeeCat]

31. I hate unrec for that reason...

...all unrec is--is a gift for the trolls and those who are shilling for corporations.

Why even open up a messageboard for that kind of manipulation?

[vssmith]

35. Agreed--I wonder how many even hit it by accident

[librechik]

2. don't worry, we don't even count those in the inflation index

I'm sure they're not important.

:sarcasm:

[MedleyMisty]

3. "threatening to push the US economy into a recession"???!!!!

OMG guys, we might be about to have a recession!

What planet does Craig Johnson live on? It's been a depression for a while down here on Earth.

[Motown_Johnny]

5. We have been in a recovery for months.

Those are just the facts. The economy is growing, therefore it isn't a depression or a recession, down here on Earth.

[Rex]

8. And you can back up those facts,

or can you not?

[Motown_Johnny]

12. easily

http://www.tradingeconomics.com/united-states/gdp-growth


^snip^


The Gross Domestic Product (GDP) in the United States expanded 3.1 percent in the fourth quarter of 2010 over the previous quarter



Country Indicator Reference Actual Previous Next Release
United States GDP Growth Rate Dec/2010 3.10 2.60 April/28






Growing, not shrinking. Not a recession or a depression.

[Rex]

15. Thank you for proving yourself wrong.

If you only base our economic situation on one statistic, then you obviously don't know anything about economics.

[Motown_Johnny]

21. One of us is dead wrong here, and it isn't me

Unless you can provide a definition for the word "recession" that isn't about the contraction of the GDP then it is you who don't know anything about economics (good luck with that).


http://dictionary.reference.com/browse/recession

^snip^

4. Economics . a period of an economic contraction, sometimes limited in scope or duration.



http://en.wikipedia.org/wiki/Recession

^snip^

In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way. Production, as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; while bankruptcies and the unemployment rate rise.

[fasttense]

30. GDP grew in the middle of the Great Depression, yet it would be another 6 years

before the 1st RepubliCON Great Depression ended.

GDP growth can not be used as an indicator of economic health.



Note that in the graph in 1938, there was another downturn in the economy. It was caused by FDR trying to balance the budget due demands by the RepubliCON congress. Sound familiar?

[Starry Messenger]

39. +1000

Excellent chart.

[Donnachaidh]

36. ahh, so using facts that elites use to lie to the folks on the ground is totally suspect

Guess we know which side of the gate some here live in. :eyes:

For those of us on the ground in middle class america -- it's NOT recovering, and we're hanging on by threads that are being cut by the very same elites waving around their little charts and pictures....

[ixion]

13. well, if by 'fact' you mean cooked book spin, then yes...

otherwise, not so much. The phrase "Don't pee on my leg and tell me it's raining" seems appropriate here.

[Rex]

16. They base their entire argument on GDP being up for the quarter.

As if that was the sole indicator...obviously they know nothing about economics and just copy pasted something they found.

[Motown_Johnny]

22. I provided 2 quarters of numbers there, if you had bothered to look

Recession means the economy is contracting. The GDP growing means we are not in a recession.

It is the very definition of the word.

Please try to back up your statements with some evidence instead of simply throwing around insults.

[Lorien]

27. Only if by "Earth" you mean Wall Street. nt

[Motown_Johnny]

29. I mean anyone who can properly define the word "recession"

I am not saying that the effects of the worst recession in American history are not still being felt, but the recession itself has ended.

[kenny blankenship]

4. For those planning to have um...street festivals ...to celebrate the coming of Austerity Measures

don't do it in your own neighborhoods!

[Rex]

6. Into a recession? Don't we need to get out of this depression first?

The media bullshit is hard at it I see.

[Horse with no Name]

7. I honestly don't think this is what is pushing us into a recession

I think we are already in a recession and it is going to push us into a depression.

[Rex]

9. Funny, I thought we were still working our way out of a depression.

Shows what I know.

[Horse with no Name]

11. Not officially, but yeah I think you are right. n/t

[Lorien]

28. It's a depression for most of us in the bottom 98%

Truly. At least 40% of the working age adults that I know are either unemployed or underemployed. They were programmers, engineers, commercial artists, animators, retail sales people, PBS employees, a chef, a car salesman, and several editors and art directors. Now they are asking me if they can clean up my yard or paint my home for $$. I've hired them for what I can afford without losing everything myself, but it sure isn't enough. Out here in reality it's most certainly a depression.

[Fire Walk With Me]

10. Guess who caused the initial recession? Banks, Bush, and Wall Street. Guess who's causing this

double-dip? Wall Street oil speculators.

They're doing it on purpose while their buddies are lining up to purchase the results at yard-sale prices.

[ThomWV]

14. I honestly believe that it was gas prices that 'broke the camel's back' last time

I think a lot of the initial foreclosures were the result of people just not having that last few dollars to make the monthly payment because they just spent on gas to get to work.

Several years ago it was reported, I believe I heard it on NPR, that the difference between having to file for bankruptcy or not was usually less than $50 or less per week in income; that if anyone in the household had made just a few bucks more per week they would have made it. Gas prices can eat up those last few dollars. The reporting may have been correct or it may not, but it was certainly believable to me.

[DCKit]

17. True, but we haven't seen a rise in food prices like this since the embargo of the 70's.

They're just piling on this time, and it's too damn much for anyone not making $60k+. We've never had a perfect storm of recession, sub-prime mortgages, gas and commodity speculation, two wars and a Republic majority in da' House.

We are so screwn.

[ThomWV]

18. +1

You got that right, all of it.

[RickFromMN]

20. Agreed. A friend once told me, it's not the debt we owe, but the cash flow problems that sink us.

We were both working at Control Data--this was several years ago.
Control Data was deep in debt. Banks had cut off lines of credit.
Everyone was surprised when Control Data had enough cash flow to pay bills.
Never mind Control Data eventually tanked, but it survived that round.

People can be in debt, but if they can make payments,
even smaller payments than what they promised, there is hope.

When the cash flow is bad and the savings are gone, people are finished.

[CoffeeCat]

33. That is completely true--and frightening

When the shineola hits the fan--it's all about cash flow and how much you've saved.

If something bad happens--you'd damn well better have saved a good chunk--6 months
living expenses, at minimum.

Your monthly payments can usually be modified. Creditors will work with you, student
loan payments can be deferred.

However, in a perfect world--you would have no debt, to increase that cash flow and help
you shore up those reserves.

That is what I hope for most people who were scared as hell during 2008--that they were
terrified into paying down debt (especially credit cards, student loans) so that obligations
are minimized.

I don't know when--or how it will happen--but we're headed for desperate, horrible economic
times. You have to protect yourself. We are chattel to our leaders--who seem hell bent
on destroying us.

And also--another poster mentioned GDP. GDP doesn't matter to the lower 98 percent in the United
States--with a global market. Our country can still be producing at high levels--because the
trade is now on a global level--with much of what is being produced, is produced by foreign
workers and bought on foreign markets. The people of the US can reap absolutely no benefit
from "increased production" here at home. They've figured out a way to succeed with out the
unwashed masses in the lower 98 percent. Just look at the DOW--record levels.

[proud patriot]

23. I fucking hate speculators

:mad:

[Initech]

26. [phone]

[Kurovski]

24. K&R.

it hurts. It hurts.

[MadHound]

25. This is only going to get worse,

What with the Feds continuing to monetize the debt, ie letting the printing presses run, the dollar is going to continue to shrink in value.

Worse, due to this dollar weakness, country after country around the world is shifting off the dollar as the reserve currency of choice. This further increases inflation.

We're coming in for a world of hurt, and it will be the wealthy elite who put us there.

[gristy]

34. .

self-delete

[tavalon]

38. Out here in reality world, we've been in a recession, flirting with depression

for quite a while. Come down and join us in hell, Wall Street.

[xchrom]

40. So far this 'recovery' has endured the gulf oil spill, interruptions in the

Middle east markets, interruptions in the Libyan oil deliveries, devaluation of the dollar,
And now this.

This is the Bestest 'Recovery' of all time!


Oy.