The Economy is getting "better"
by Duckman GR
[P]rivate-sector economists at a weekend retreat agreed....
Fed officials on the sidelines remained staunchly optimistic that, if and when oil prices settle, a summer lull will abate and growth will forge ahead.
Besides the fact that this is a rather large caveat, and one that if it were to pass has it's own issues, the real kicker comes all the way at the end of the article, as those economists bask in the glories of the Teton Range.
[Economist Allen Sinai of Decision Economics Inc.] sees slower growth ahead regardless of who takes the White House since the tax-cut lift is fading for consumers just as energy cost rises are hitting American wallets.
"If Bush is reelected, the tax-cut stimulus will fade even if tax cuts were made permanent," he said. "If Kerry is elected, taxes are going to be raised and there'd be some hits to growth from that, but either way there is a risk of fading in growth in the economy or of a fizzling in 2005-2006 and those risks look higher to us than they have in a long time."
So, in the short term, if Bush and his Saudi brothers can force, as promised, oil prices down, then the impact of higher oil prices would be dampened on the U.S. economy. Never mind that demand for oil is not decreasing world wide, that in fact estimates were recently revised upwards*.
But, in the longer run, you know, right around the curve in the road, just over that rise which might just be a cliff but we have no idea because we insist on looking only directly ahead of us because I'm Bush and the world will end if I don't get re-selected, but in the longer run, the risks of negative impacts of higher oil prices is greater than ever, but Alan G thinks it's all a great big effing joke.**
We'll get into how great the economy is in future posts, but just remember this. Oil prices have "eased" to around $43 a barrel, but the Saudi's were promising $28 by November. Do you expect the price you're paying at the pump to go down to $1.20 a gallon, an equivalent drop to that $28 number?
* The IEA, set up thirty years ago to advise oil consuming nations, said world demand would rise by a further 1.8 million barrels next year to 84 million barrels a day.
It added that Opec's production capacity would rise by 400,000 barrels a day this year, and by a further 700,000 barrels a day in 2005.
** Greenspan drew chuckles when he told 150 invited guests the record of much economic forecasting was "awful." That made it important to plan now for steps like longer working lives with some 75 million American "baby boomers" headed for retirement by decade's end.