Penny Wise and Pound Foolish: The American Consumer Gets Suckered - Again
I noticed a funny thing, right before I left for New York at the beginning of November, to bury my mother.
The price of gasoline had plummeted by $0.10/gallon in 2 days. When I say plummeted, I don't mean "edged down" "trickled" or "decreased". I mean plummeted. From $3.27/gallon for Supreme Unleaded (what I put in my little toy, my 2005 Honda Accord Hybrid named Sheena) to $3.17. The adjective is apt, given that it had, in all the years I've been buying gasoline, gone down by as a high a percentage in my memory. It had not even *increased* by $0.10 in two days - that took almost a week, even during the worst of the Katrina days.
When I returned home a week later, on the 19th, it had gone down another $0.20, to $2.99/gallon. Tt has gone down each day since.
Today, less than a month later, the price of gasoline is, at my neighborhood Shell and neighborhood Chevron, $2.63/gallon.
A $0.64 reduction in less than 3 weeks. A reduction of 20%.
The little voice at the back of my head that says "we're being had" started screaming a few days ago, and has been yelling ever since. At a minimum, this rapid decline in gas prices at a time where 30% of the country's natural gas production and 40% of its crude oil production in the Gulf of Mexico is still offline due to Hurricane Katrina was clear evidence.
Today, when I read this news, announcing that "Happy Days are here again for the American consumer, just in time for Christmas!" it all became crystal clear:
We are being played, and played hard, by the Man. The Republican man. The corporate Man. The "All your ducets are belong to Us" man.
The message that we are now being asked to absorb is clear: all is right with the American economy, all evidence to the contrary notwithstanding. Don't worry about your job, your unemployment check, and definitely not your heating/gas bill. Go out and SPEND, SPEND, SPEND (even if it's by taking out more debt that you already cannot afford!) Do not look at that man behind the curtain. Definitely don't do that.
That's right, we the American consumer are again being had. It is inarguable that consumer spending accounts for 2/3 of all economic activity, such that consumer confidence is a belwether measure of the state of the economy. When consumers aren't happy, America (and definitely not corporate America) ain't happy. Why are we so happy now? Just because of cheaper gas:
A decline of more than 40 cents in gasoline prices this month and the improving job outlook have combined to help restore consumers' confidence,” Lynn Franco, director of The Conference Board Consumer Research Centre, said in a statement.
“While the index remains below its pre-Katrina levels, the shock of the hurricanes and subsequent leap in gas prices has begun wearing off just in time for the holiday season,” Ms. Franco said.
What a coincidence.
The Oil Industry, having successfully bled us for at least $20 billion in profits in the same quarter as Hurricane Katrina for no reason other than they could, has now obviously gotten the word from somebody on high: Drop your prices fast. The profit-taking party is over. Not only might folks' wise up and start trying to -- gasp! -- regulate you (or at least have a congressional hearing to think about it), but Christmas is coming. We all know what that means. People can't afford to both feed you and feed Santa. If Santa doesn't get fed, and children don't get a good Christmas, their parents get testy. They get resentful. They get morose.
And, if like most Americans they are working (or trying to work, structural obstacles like flattened wages and routine year-end layoffs like those at Merck and GM announced in the past two weeks, always with the hope of shoring up the corporate/shareholder bottom line) they start asking questions. Such as these:
Why is the government spending so damned much of our tax money fighting in Iraq when it seems that (if you believe Congressman Murtha) that 4/5 of Iraqis don't even want us there?
Why can't the government afford the billions to rebuild New Orleans and help the hundreds of thousands still displaced or trying to come home but facing obstacles?
Not to mention:
why did we need a Bankruptcy Bill when the credit card industry is posting record profits but so many people are having such a hard time making ends meet because of nearly-usurious tack-on fees and charges imposed by those same credit card companies?
The very types of questions that probably explained the plummeting of Dubbya's popularity to a new low of around 36% no matter whose numbers you believe: ARG's or Fox News's.
The very types of questions that it is clear that the Man on High himself, the occupant of 1600 Pennsylvania Avenue, Washington DC, cannot afford to have too many people asking. Because he might find himself out of a fucking job - or at least find his minions in Congress out of one beginning in '06.
Enter the 20% plummet in gasoline prices in less than a month. With no end in sight, given that today crude is trading at only $57/barrel, having peaked at nearly $71 just 3 months ago. A reduction of more than 20%.
Who is responsible for this miracle reversal in our gas fortunes?
If I believe their hype, OPEC. From the article linked immediately above comes this gem of an admission:
Oil eased towards $57 Tuesday, having slid after producer group OPEC bent over backwards to assure consumers they would fill up their fuel tanks this winter.
I cannot possibly be the only person who has noticed this dramatic and sudden reversal of gas fortunes just in time for Christmas. It seems obvious that it is just as much smoke and mirrors as the original, painful, increases were. The timing is too convenient, the reversal of fortunes too obvious. It defies what we are being told about the difficulties ahead in the coming winter, as the price of home heating oil was predicted to break some families. You'd expect to be reading success stories of the miraculous recovery of Gulf of Mexico production, acceptance of Venezuela's generous offer to heat the homes of the poor at a discount price, something.
But there is nothing. Nobody seems to be writing about it. Or even noticing it.
But we Americans don't care. As long as they can once again look forward to Christmas having overspent at the mall, there is every reason to be confident about the United States economy. Not only do they not care about today, but their giddiness causes them to swallow the pig in a poke that that all will be right in the future too:
Consumers' outlook for the next six months is considerably more upbeat, although not as optimistic as earlier this year. Those expecting business conditions to worsen decreased to 11.7 percent from 18.5 percent. Those expecting business conditions to improve rose to 18.8 percent from 14.1 percent.
The outlook for the labor market is also more optimistic. Those expecting more jobs to become available in the coming months increased to 14.2 percent from 12.3 percent, while those expecting fewer jobs fell to 17.7 percent from 24.0 percent in October. The proportion of consumers anticipating their incomes to increase in the months ahead improved to 20.9 percent from 17.4 percent last month.
Of course, the evidence is increasingly clear that the future of the US economy remains, overall, a lot bleaker than we're being told. Forget what all the folks who actually study economic theory (and that's not me, I got a C+ in Econ) and the US economy are saying about the long-term impacts of structural failings in the US economy. Forget jerryrigged indicators like the unemployment rate(which deliberately defines entire groups of unemployed people out of existence) superficial indicators like the CPI (which deliberately exclude a key expense of living, housing), or a outright deliberately misleading indicators like the productivity index (which is really a measure of how much more labor is squeezed from the American worker each day).
All you need to know is all the investors and moneymakers reassuring you that the US economy is strong and still has "forward momentum". That's all that matters, even even if the majority of Americans actually trying to eat, sleep and pay bills on the ground didn't see things quite that way, and felt that addressing the economic problems of this country was second in importance only to dealing with the Iraq war.
Or at least that's what they felt two weeks ago.
But now? As Dinah Washington once sang "What a difference a day makes, 24 little hours.....for the sun and the flowers, where there used to be rain....."
Amazing what a 20% drop in gas prices can do to one's long-term outlook as an American.
So, it's back to the default theme for our lives- everything is just fucking fine in America. And remember, boys and girls: without a good Christmas for the American retail industry, the terrorists will have won. But since you cannot get blood from a turnip, we have to put more money in people's pockets - or at least convince them that it is there - if we are going to Win. Thank God we have OPEC, and the Right, and Emperor Dubbya, to thank for the American consumer, once again, being convinced that the bleak reality they see right in front of them doesn't really exist so that they can go out, charge it up, and save America.
Yup, there really is a sucker born every minute.