One thing I learned in my college economics classes was that the American consumer drives the American economy. The old business saying, "You have to spend money to make money." also applies to our economy. While economic policies can affect the long range outlook, regardless what Obama and McCain tell us about saving us as soon as they're elected, and the wealthiest among us provide the investment resources to expand industries, it is the average American that drives the overall economic health of our nation.
With that in mind, and being in a stable financial position for now, our economic relief dollars got spent for vacation and a couple of other things. Our small part to boost the economy. Now, with yesterday's record oil prices and the twenty five cent jump in gas prices at our stations I'm having a fundamental shift in my approach to our family finances. We are carefully considering our plans for my second week off. It was to be a camping trip an hour and a half drive away. If fuel prices push higher, the cost to drive our RV, at 11 mpg, may prove prohibitive.
Our local plans are changing as well. I passed up going to the gym on Friday morning, my first chance in several weeks, and did a hill workout with some push ups and sit ups instead. The reason? I didn't want to burn the gas going. I also passed up running the Founders Day 5K in Charlestown, IN this morning for much the same reason. I couldn't bring myself to burn the gas or pay the entry fee.
I'm assuming a bunker mentality. Hoping to hold our position until the worse is over with. A big change from where I was even a week ago, when I had hoped to use our financial position to take advantage of low interest rates to perhaps buy a larger house.
28 June 2008
Subscribe to:
Post Comments (Atom)
2 comments:
I don't think it's over anytime soon. One of the Middle Eastern countries just built an expansion to their refinery capacity by 50% and are not using it and have no plans to.
The crisis is not just China with 1,000 new cars added to the road every day. It's also due in large part to choices the suppliers are making.
I heard a guy who works on refineries in the ME say recently that the word is that Saudi Arabia and others are driving prices up so that our oil companies spend a fortune in new discovery, drilling and increased capacity. Then the Middle East will drive the prices down to the ground with highly expanded capacity, bankrupting our US oil companies so that they have to be bailed out with ME funds.
I don't know if it's true, but I do know that consumer debt as a percentage of income is at an all-time high and consumer saving is at an all-time low. And the dollar needs to stay weak because of the financing of government debt.
OK- once again, Brian is verbose. Sorry! Anyway, yeah, I'm changing some things because of the current economics.
I glanced at a graph in a book the guy next to me was reading on my last flight. It showed the ratio of consumer debt to Gross Domestic Product from 1980 to 2007.
It was flat until 1988 and then shot nearly vertical from 1988 until now. Seems the wonderful 1990's was an illusion created solely by credit, not genuine financial growth and strength.
We've got to learn to be content or we continue to feed the beast. I don't think there is one single factor to blame, but we have to start controling the things we can.
Post a Comment