‘Liberals’ Are Wildly Out Of Touch!

Background Reading

Summary

A T.J. Maxx store last year in Virginia. Energy prices are falling, and the savings rate is up. Credit James Lawler Duggan/Reuters

A T.J. Maxx store last year in Virginia. Energy prices are falling, and the savings rate is up. Credit James Lawler Duggan/Reuters

Sometimes, even the supposed experts can lose track of a billion dollars or two. Or, in this case, $100 billion.

While few outside of Texas and North Dakota are complaining about this huge savings that consumers have enjoyed since energy prices began falling last summer, economists have been stumped recently trying to figure out exactly what consumers are doing with the windfall.

They have not gone on a shopping spree at the mall or online. Results at many retail chains have been mixed, and some stores that are middle-class fixtures, like Sears and J.C. Penney, continue to struggle.

One hint at what consumers might be thinking came Monday, when new government data on the economy showed a healthy gain for wages and salaries in January, even as spending by consumers inched lower for the second month in a row. As a result, the savings rate ticked upward to 5.5 percent, the highest level in just over two years.

The yardsticks for retail activity have been surprisingly lackluster lately. Even when the effect of lower gas prices and therefore less spending at service stations is stripped out, core retail sales were flat last month and actually dipped 0.2 percent in December.

“There is a little head-scratching going on,” said Michael Hanson, senior United States economist at Bank of America Merrill Lynch. “You can’t deny that everyone on Wall Street has been looking for better data. The pickup in the savings rate is a little bit of a surprise and it is an indication that people are still cautious.”

Still, no one disputes the benefits of lower energy prices, especially for less affluent Americans who pay a larger share of their income to fuel their cars and heat their homes.

With gas prices having dropped to $2.50 at the end of 2014 from a high of $3.78 in June, American drivers saved an estimated $76 billion last year, according to Douglas P. Handler, chief United States economist at IHS, a research firm.

A further drop in gas prices in January created billions more in savings. And despite a recent rebound to $2.33 a gallon as of last week, consumers are still receiving a huge windfall compared with a year ago. In the Northeast, where the weather has been frigid and many people depend on heating oil, the extra savings has also been substantial.

“The big question is, where did it go?” said Mr. Handler, who estimates the typical household will have an extra $1,100 to $1,200 to spend this year if energy prices remain steady.

As with many big questions in macroeconomics, there are a multitude of explanations, and a final answer will not be available for a while until more data arrives.

One theory is that people are banking the savings, as the higher savings rate in December and January suggests.

Despite low gas prices, consumers remained cautious about spending last month.  (Irfan Khan / Los Angeles Times)

Despite low gas prices, consumers remained cautious about spending last month. (Irfan Khan / Los Angeles Times)

U.S. consumers stayed away from shopping in April despite warmer weather and the Easter holiday, leaving retail sales stagnant.

Retail sales were flat last month compared to March, the Commerce Department said Wednesday. That was below analyst predictions of 0.2% growth. The tally ticked up 0.1% when the volatile measure of motor vehicle and parts was stripped out.

Analysts said shoppers continue to be wary of spending, a trend that led to a string of lackluster months in winter before a slight climb in retail sales last month.

“Retail sales disappointed in April,” said Jack Kleinhenz, chief economist for the National Retail Federation. “Consumer spending on a year-over-year basis was anemic.”

Although some experts had predicted pent-up demand would push shoppers into stores once the weather thawed, many consumers opted to sock away their savings from cheaper gas prices to pay down debt. And now that gas prices have rebounded, shoppers have even less cash to splurge on trips to the mall.

Retail sales are considered a bellwether of consumer spending, which makes up two-thirds or more of U.S. economic activity. In April, the measure was up 1.5% from the same month in 2014.

Consumers remain in a frugal mindset despite other signs that the economy is improving. The national unemployment rate dipped to 5.4% in April, the lowest level in nearly seven years.

But the pace of wage growth — which many economists have blamed for weak retail sales — slowed sharply last month. Average hourly earnings climbed just 3 cents last month, half of March’s increase.

A West Coast ports dispute and unusually bad weather in some parts of the country also depressed sales at some retailers.

Macy’s said Wednesday that its profit for the first quarter dropped 13%. The department store chain blamed much of the slide on lower spending by foreign tourists, bad weather and the backup at the ports of Los Angeles and elsewhere.

But some industry watchers expect consumers to make a comeback as summer approaches.

“Despite the weak report, the outlook remains positive,” said Scott Hoyt, an economist at Moody’s Analytics. “Job gains remain sufficient to tighten labor markets, which will lift earnings. Housing markets will keep improving as well, as rising house prices lift wealth and construction.”

A few sectors showed strength. Americans dined out in April, pushing sales at food and drinking establishments up 0.7%. Clothing and accessories shops reported growth of 0.2%. Health and personal care stores grew by 0.8%.

But several categories showed a slump. Gasoline stations, whose low prices were expected to boost spending, dipped 0.7%. Furniture stores fell by 0.9%. electronics shops slid 0.4% and department stores dipped 2.2%. 


TakeAways

So let me get this straight the idiots who pass as journalists for the StreetsBlog franchise want to ‘raise the gasoline tax‘? Why?

Well we Liberals are fond of not giving a flying f*ck where the money for our hair-brained schemes come from. We just want more of it. A decade ago we were all for raising the Gasoline Tax to discourage driving. And in response to this the automobile manufacturers raised their fleet mileage figures.

This meant that per mile driven cars cost less to operate. And on top of all of this the pollution figures plummeted. In fact it is probably safe to say that cows and bicyclists are the real polluters these days given all the methane and smelly hot air released by these respective groups.

Conservatives too are working to wrest as much money from the ‘working poor‘ as they can as well:

And like Liberals they have high minded reasons why the monies that should be going to their pet projects needed to be reclaimed from some other revenue stream.

Get This Through Your Thick Skulls

Raising the Gasoline Tax will hurt the working poor, as one of the two articles above admitted:

Still, no one disputes the benefits of lower energy prices, especially for less affluent Americans who pay a larger share of their income to fuel their cars and heat their homes.

And of course this makes no sense to Angie and her minions because all they care about is how many more miles of ‘pretty green paint‘ can be laid down, only to peel off in winter and make the pavement slippery when wet.

None of the so-called bicycle infrastructure is really doing much for Chicago or for New York for that matter. On the other hand Philadelphia is doing more with far less because they ‘get it‘. Bicycling is a last mile sort of transportation.

If you have under 5 miles to travel and it is cheaper you will probably take a bike. But we on the other hand (unlike Philadelphia) are supposedly petrified of riding outside a ‘bike lane‘. Shut down our bike lane for construction and we launch a Holy War via our lapdogs in the media:

Yet we continue to routinely drive right through intersections (on our bikes) when the lights are red or through stop signs on days ending in ‘Y’, all the while proclaiming to be nervous when:

A construction project on Milwaukee Avenue, one of the busiest bike lanes in the city, is putting riders at risk by forcing them into traffic.

The Working Poor Need The Money

Unlike most of us the Real Progressives in our city have jobs that take them ‘away‘ from the Loop. They don’t have cushy little jobs where they can ‘call in sickthree or four times a month while maintaining their medical benefits.

Nope. These folks have to drive more often than not to their job sites. And if they are truly lucky the CTA bus or train will get them most of the way out to the suburbs before they have to take a bus the last few miles.

So keep your grubby Socialist mitts off the few remaining dollars the Working Poor do not have to spend to get to work or heat their homes.