When gasoline dropped from $4 a gallon to $3 a gallon mainstream media, Wall Street economists and, of course, the White House proclaimed a boon for the American public. The math was simple. One dollar saved at the pump meant a dollar to be spent on other things in the economy. Job security, increased indebtedness and rising basic costs (healthcare, food and education) were inconsequential as all were convinced that the extra $1 would reinvigorate the economy that was unresponsive to a decade long Federal Reserve experiment (ZIRP and QE).
Most stopped short at following the trail of breadcrumbs. If $1 was spent on a gizmo or gadget at the mall it would be beneficial for all that had to be hired to service the $1 spender. Millennial college graduates with BAs, Masters and PhDs could find gainful employment providing such insightful information as “It comes in varying colors”. Unfortunately, since most of what would be bought with the $1 was made and manufactured in a foreign land, the bulk of the spending would be beneficial over there, not here.
As time went by the reality that the $1 was not being spent to reinvigorate the dead GDP finally was understood by all, grudgingly.
Fast forward and its déjà vus all over again. With Christmas on the horizon and gasoline having fallen from $3 to $2 per gallon, pronouncements are coming in fast and furious about the extra $1 to be spent at the mall. The math remains simple which is why the varying retail associations have predicted, once again, a boon for the economy and a vibrant Holiday season. Unfortunately, job security, increased indebtedness and rising basic living costs have not gone away putting Holiday spending in question.
In addition, the manufacturers that actually make the stuff that is sitting on the shelves hasn’t changed. Therefore, if a dollar is spent it certainly won’t be beneficial to the economy of the good ole US of A but will do wonders for a village in Laos, Cambodia or Viet Nam.
There is, however, one thing that is certain. Unemployment will drop below 5%. In anticipation of the $1 being spent the millennial graduates will be gratefully needed behind the counters. After all, who better to proclaim with authority than an indebted graduate sporting a Bachelors, a Masters and even a PhD thatIt Comes in Varying Colors!