In our opinion, now that Memorial Day is over, gas may again go down and that is not good news. The price of oil and gas are in our basket of economic indicators and they are a major part of it. If we could hold the price of oil and gas about where they are right now, the future of the economy would look better to us.
We are also seeing heavy discounting in the retail and discount sectors and especially in the automobile sector as car producers are struggling to sell their products. Dealerships in our area are crammed full of unsold vehicles as some makes are offering discounts of over 15% off of the MSRP of their product. One of the down sides to cheap gasoline is that car manufacturers are producing larger and larger and more expensive vehicles and are then having to discount them in a weak economy.
President Obama has been on a push for more conservation and this cheap gas in working against that. However, it is putting more money in the economy but whether people will save or spend it is anyone's guess. This Memorial Day driving season saw the heaviest road miles logged in a decade. In our town of Marion, Illinois, which is a travel center for our area right on Interstate 57 and 24 just to the south, the lodgings have been mainly full to over booked at the start of the summer season. The good restaurants are doing very well on this route between Memphis and Chicago, St Louis and Nashville, Tennessee.
The revised GDP first quarter figures come out this week and we will see if we stayed in the positive or slipped to negative growth for the first quarter of the year. Two quarters of negative growth defines a recession and we could be over half way there. On the positive side, however, it has been a generally mild one thus far. The Fed would like to start raising rates but the always looming threat of deflation is causing them to pause for a while to see what is going to happen with the economy. At least quantitative easing has pretty much ended but they don't have many bullets in their gun to combat what might be on the way.
To say that "God exists" is the greatest understatement ever made across space and time.
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