It must be nice being an economist for a living. Much like meteorologists, university professors, and the Clintons, getting almost everything wrong doesn’t seem to impact job security. Remember when economists were forecasting 3 percent GDP growth for 2014? Well, that is pretty much already debunked, after the first quarter contracted by more than a full percent; but the rest of the year might have its own distinct setbacks. The biggest “headwind” we can expect in the second half of 2014 can be summed up in two words: Oil prices.
David Williams, with Williams Edge, expects the price of crude to increase by “biblical” proportions in the near term. And while his technical analysis is sound, it is further buoyed by the events unfolding throughout the Middle East. Some experts have even predicted oil climbing above $125 a barrel. Let’s face it, $125 oil isn’t exactly going to help an economy that is clawing and scratching for the most modest of gains.
Hooray! Higher gas prices! And this hike in prices, of course, will conveniently coincide with increased inflation, stagnating wages, record joblessness, and anemic economic growth. (Haven’t we seen this movie before?)
As prices start to climb, those evil speculators and oil companies will quickly earn the wrath of liberal pundits and clueless CNBC analysts. And, really, the message is bound to stick. I mean, it’s pretty easy for people to hold a little grudge against big businesses when they’re watching those numbers roll over at their local gas station. But, the truth is much simpler than some convoluted conspiracy between “speculators” and oil giants… After all, contrary to the rants of anti-business liberals, oil companies actually prefer slightly lower prices. Unreasonably high prices tend to curb consumption; and let’s face it: You can charge anything you want for a gallon of gasoline, but if people aren’t buying it you won’t make much of a profit.
The bigger news (yes… there are more important things than the profit statement for Exxon Mobile) is what such prices will do to our already fragile economy. And the blame can be put squarely on the shoulders of our almighty central planners in DC.
Our Campaigner in Chief has done his best to avoid creating an environment that encourages job creation and economic growth. And, while the hike in oil prices might not have been completely avoidable, a more robust economy would certainly temper the impact of climbing crude prices. Instead of allowing businesses the opportunity to expand, hire, and increase wages, our all-knowing DC politicos have drowned the economy in regulation and crony-capitalist pet projects.
The Chevy Volt, new CAFE Standards, and treadmill powered public transit (that might not actually be a thing) aren’t the answer. For starters, some semblance of coherent foreign policy would be a more effective hedge against outrageous oil prices. More domestic production would also go a long way. But, most importantly, increases in pump-prices could be weathered a whole lot easier if Americans had seen their wealth growing over the last few years. Ya know, if incomes were climbing, jobs were being created, and consumers weren’t quite so strapped for cash, we might be able to shell out a few more bucks to fill our gas tanks without it taking a sizeable bite out of an already anemic “recovery”.
It wasn’t too long ago that CNBC pundits, NYT editors, and CNN anchors were willing to blame the White House for any (and every) increase in oil prices… But I guess things changed once “W” returned to his ranch in Texas. Apparently Obamanomics’ profoundly negative impact on household income, and our Nobel Laureate’s childish foreign policy, have no impact on the coming spike in oil prices… Right?
So, let’s recap: Millions of Americans out of work, potentially outrageous oil prices, mass chaos in the Middle East, increased inflation (assuming the Fed has their way), and stagnating wages… Hope and Change apparently looks an awful lot like 1979.