The Conference Board Leading Economic Index ® of indicators just reported a gain of 0.6 percent in April. This is small but this is good. The index is approaching the levels measured in 2004.
The Conference Board Consumer Confidence Index ® reported a couple of weeks ago that the index is now at 68.1, up from 61.9 at its March reading. This is small but is not so good. While an improvement, Consumer Confidence needs to be in the index range of 95 in order to signal growth. We are woefully short. But it is an increase.
These improvements happened even though the Great Sequestration kicked in. Imagine that. I thought we were supposed to have to initiate a new government program to re-hang the sky.
One might also suspect that falling gasoline prices might have much to do with it.
There are some stats out there showing that every penny rise in gasoline prices costs consumers $1 billion a year. While they don’t say the same for the reverse and what it might save the consumer, it doesn’t take a Milton Friedman to figure out that there are savings.
When folks don’t have to put their available expendable income in their car and truck tanks they can expend it elsewhere, eating out, clothing and the like, which also appear on the upswing. After all, if we can get those billions out of our gas tanks and into the store and restaurants of our consumer driven economy (70% of all economic activity), we can get something going on.
Granted, affordable energy prices, standing alone, won’t revitalize and restore our once mighty industrial capacity but at least entrance level jobs might reappear.
One suspects that when the break room chat turns to how the Great Sequestration didn't hurt anything (as predicted by Erin Arvedlund of the Philadelphia Inquirer on 3/26/13 among many others) and how gas prices continue to slide at the Stop-N-Go, that the consumer confidence index will improve more robustly. But watch out for the Memorial Day/Summer vacation ratcheting up.
Getting our gasoline refining capacity at least to where in was in the late '70's, will help. Repealing or banning the inefficient and cost enhancing “seasonal blends” of gasoline would also help.
More importantly, perhaps, is the need to get relief from the non fuel efficient ethanol requirements. Doing that will not only reduce the price of fuel but also drive down the price of food. Have you bought a loaf of bread lately?
And don’t worry about the corporate corn farmers, they still have the Chinese market. Finally, something we can sell them other than debt.
Capitalism: the elixir for the Obama eurosocialist economic policies. Works every time.