Whenever we see a strange datapoint — something that hasn’t happened for decades, its worth noting. Recall in 2005, the US Savings rate first slipped to zero.
More recently, something else unusual happened. Consumers spent more purchasing fuel for the motnh then they did on vehicles: Drivers Spend More on Fuel Than Cars for First Time Since 1982:
"Consumers spent more on gasoline than vehicles and parts for the first time in 26 years in May and June, as U.S. pump prices headed for a record.
Gasoline accounted for about 4.4 percent of spending in June, compared with 3.9 percent for autos and motor parts, according to the U.S. Bureau of Economic Analysis. Both were at about 4 percent in May. The last time gasoline exceeded cars and parts as a percentage of spending was in January 1982…
Record prices at the pump are already affecting U.S. gasoline demand, which sank to a five-year low in the first seven months of the year, according to the American Petroleum Institute in Washington. The decline in demand has slashed sales of automobiles and cut consumer spending.
Auto sales fell to the lowest in 15 years in July and partly accounted for retail sales dropping for the first time in five months. Consumer spending makes up more than two-thirds of the U.S. economy."
This is yet another example as to why the focus on Core Inflation is so silly . . .
Chart via Jake at Econompic
Your mileage may vary . . .
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Previously:
U.S. Savings Rate = 0% (August 2005)
http://bigpicture.typepad.com/comments/2005/08/us_savings_rate.html
"The Underlevered American Household" (June 2006)
http://bigpicture.typepad.com/comments/2006/06/james_altucher_.html
Source:
Drivers Spend More on Fuel Than Cars for First Time Since 1982
Margot Habiby
Bloomberg, Aug. 15 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6yhAux3qDbI&
1982. Rings a bell. What was happening back then? Oh yeah.
The United States was experiencing its worst recession since the Depression, with conditions frighteningly reminiscent of those 50 years earlier. By November 1982, unemployment reached, nine million, the highest rate since the Depression; 17,000 businesses failed, the second highest number since 1933; farmers lost their land; and many sick, elderly, and poor became homeless.
whiners.
Another reasson to work wrom home.
OT:
Jennifer,
on your click-thru, you have, in your page title: …All abour ARM and Fixed…
may be a typo of “about”
To the post,
With T. Boone bringing back, to the fore, the Idea of CNG-fueled vehicles, I’ve been endeavoring to finda Honda Civic GX here in Pennsylvania-home of, not only, the first Oil Well, but also, much NattyGas & Coal-Bed Methane–to say nothing of LFG.
GFL, Jim!~
It is re-amazing, to me, how shackled, by our FedGov/EPA & CARB, CNG-fueled vehicles have been.
I guess it’s hard to be “Addicted to Oil” if we were fueling our tanks with composting Table Scraps–maybe that’s another story..
Once again BR, YOU MISSED the point on Core inflation. When Greenspan and Bernanke talked about core inflation they are talking about PORN, as in Hard Core. Were you not the one that wrote that we are in a recession because Porn sales are down? A recession proof industry that is suffering. Pbviously they are in deflationary mode, thus the low CPI #s for months. That’s why the Fed had to lower rates. Because men pay for porn with their credit cards, and those rates need to come down in order to increase porn consumption.
Remenber, it’s a Man’s world
Signed,
Elliot Spitzer with help from John Edwards
First Oilwell in NA was in Canada at Sarnia, I believe they are still stripping.
I can see it now — THE NEXT BIG THING — bulk purchases of gasoline, or futures contracts to pre-purchase a year’s worth of gasoline at a fixed price (just like the airlines!), accompanied by a mag-striped card containing your “gas credit” balance, and a free car to go with it.
The car will be your choice of a Hummer, a Suburban, or a 6-liter extended cab pickup.
Buying 2 gas cards will get you a free motor home.
Nominal,
thanks for the further info, seems that COC’s, as well, should be taken with a grain of salt..
these guys: http://www.little-mountain.com/oilandgasmuseum/Pages/whereitallbegan.html
are squawking W. Virginia was First..
“Hello, Col. Drake? Are you sitting down for this?
As early as the 1820s, oil drilled from West Virginia wells was used as a light source and an industrial lubricant marking the first documented commercial use of oil in this country, says the author of a new history book on West Virginia’s early oil and gas business.
http://www.little-mountain.com/oilandgasmuseum/Pages/moveover.html
Drake, referring to Titusville, Penn. driller..
I have a couple of charts (click through Jake if interested) that clearly show the increased spending on gasoline starting in the late 1990’s.
More interesting (to me) is that combined outlays for motor vehicles AND gas has not risen substantially.
In fact, spending for motor vehicles, parts, gasoline, and oil (in nominal terms) grew at a similar pace (or even less) than in years past.
The big difference is that money spent on oil ends up in the hands of oil producing countries, while our recent thrift (as it relates to autos) negatively impacts the U.S. economy.
Curious to see if the demand destruction of the past several weeks holds out. Canceling the car trip cross-country is one thing, but piano lessons, soccer practice, etc. are about to gear back up. Only so much car-pooling efficiency out there. Also want to see if the new mass-transit commuters stick it out through shorter daylight and winter weather. If gas is back at or below 3.50 on a consistent basis I’d bet the demand cranks back toward ‘normal.’