Not A Recession

[snousle]

Remember back in November when I posted an article about how a majority of Americans persistently believe that the economy is in or near recession when it isn't?

Well, Q1 of 2008 was not a recession.

Just thought I'd let you know.

Comments

[snousle.livejournal.com]

Economists disagree. In Europe gas costs $10 a gallon and life does not grind to a halt there. People adapt quite well to such things in time. American energy use is so wasteful that I'd guess the price of oil could go to $200 while only raising prices 10%, if that. People with long commutes for low paying jobs would feel the pinch, but there are so many opportunities for conservation that the economy as a whole would adapt to higher prices rather quickly.

Oil prices have gone up 10x in the past ten years and 2x in the past two years. If the economy were so sensitive to it that further price rises would be calamatous, the much-anticipated recession would surely have appeared by now.

In any case, many economists are proposing that current oil prices are part of a larger commodities bubble, since the fundamentals of supply don't support the current price. The price is as likely to fall dramatically as it is to rise further.

[furr-a-bruin.livejournal.com]

My understanding is that a lot of the bulk distribution in Europe is rail-based, rather than truck-based as it is here. We certainly have rail here, but how much traffic could be diverted from trucks to rail? Your response seems to assume that such an "adjustment" could be made relatively quickly, and I don't know that we have the capacity.

Likewise - many European cities have effective mass transit systems, relatively few US cities do. I don't think we have the infrastructure to easily adapt to fuel costs that rise too far, too fast - admittedly, I'm not sure how far is too far or how fast is too fast.

The only good thing about high fuel prices is that it's annoying at least some of the people who drive gas-guzzlers for no reason other than "image".