New bankruptcies as consumer sentiment deteriorates.
Market Watch reports that the University of Michigan/Reuters index of consumer sentiment fell to 63.2 in April. It’s been below the trough reached in the last recession for some time now, and today’s number brings it slightly below the lowest value in the previous (1990-91) recession as well. The same survey reports that consumer expectations of inflation for the coming year have increased from 4.3% to 4.8%.
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Gasoline prices can’t be helping with either of those perceptions– here’s how they look in your area at the moment.
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Also making the news today is Frontier Airlines:
Hard-pressed by competing airlines in its Denver hub and struggling to deal with the rising cost of jet fuel, Frontier Airlines Holdings Inc. and its subsidiaries have filed for Chapter 11 bankruptcy protection….
Frontier President and Chief Executive Officer Sean Menke … blamed an “unexpected attempt” by First Data Corp., its principal credit card processor, to start withholding “significant proceeds received from the sale of Frontier tickets,” which would have hurt the carrier’s liquidity.
“We felt that Frontier would be able to withstand the challenges confronting the U.S. airline industry, which include unprecedented and significant increases in the cost of jet fuel and the impact of the credit crisis in the financial markets, without seeking bankruptcy protection,” Mr. Menke said. He added that Frontier has continued to perform well and that it has not experienced a decrease in consumer demand.
Today’s Wall Street Journal also carried this:
Linens ‘n Things Inc., a home-furnishings retailer caught by an increasing debt load and shrinking housing market, is expected to file for Chapter 11 bankruptcy-court protection by Tuesday, several people familiar with the matter said.
A Linens ‘n Things filing would mark one of the first major retailers to seek bankruptcy protection in this economic downturn. The New Jersey retailer, which sells home products like towels, bath rugs and kitchen appliances, has about 590 stores in 46 states and employs 17,000 people.
Not the sort of headlines you’d expect to see if you thought we’re not in a recession. And not what you’d want to see if you still had hopes of avoiding one.
Technorati Tags: macroeconomics,
recession,
gas prices,
credit crunch
What colors would they use for a map of the price of diesel? Here in California it would have to be screaming red or some color beyond red. Got our diesel bill the other day and looked at the price per gallon; $4.40!!!!! We used to get a good discount but not anymore.
Casa de Frita on hwy 152 was selling it for $4.08. To bad Casa de is too far away to use.
I am taking my horse to ride in the Gold Country and the diesel is going to cost me more than the place we are staying at.
All that said, traffic does not seem to be down and people are driving just as fast.
The map shows low-ish gasoline prices in the Phoenix area. That surprises me, because there is not a refinery in the state of Arizona. All the gasoline that gets to Phoenix moves by pipeline from either El Paso or Los Angeles. Why, then, are prices lower there? Is someone in the distribution chain eating the loss?
dilbert dogburt:
That’s “Casa de Fruta” not “Frita.”
BTW, how is Catbert?
So with all this unwelcome news, why is the frowning face still stuck at 7.7 percent where it was three months ago?
2slugbaits, the frowning face and 7.7% are two different summaries. The face is my personal bottom line, and frowning is the worst it gets. It has been stuck there since early January and isn’t about to move. The 7.7% is a completely objective backward-looking summary based on the GDP numbers. It will change at the end of this month when the 2008:Q1 advance numbers are released.
Viva Econbrowser!
How about this gem released Friday Afternoon:
http://research.stlouisfed.org/fred2/series/BOGNONBR
We’ll know the price of diesel is too high when dilbert decides the scenery in the Gold Country is not worth the cost of hauling a horse there.
That is quite a graph SRL. All we need now is some good liberal policies like tax increases and protectionism and we could make this one a real doozy. We have three liberals running for president and a congress led by two of the most liberal and inept people I have ever seen. I am starting to get a little nervous.
Does every thread have to be turned into a partisan propaganda outlet, Hitchhiker?
The current crisis in its entirety was created by the very conservative Bush Administration, a Republican Congress (to be fair, with some Democratic votes), and a Republican Fed chair. The tax cuts and increased spending that created massive deficits. A failed occupation– one that was predicted to fail ahead of time for lack of manpower by Gen. Eric Shinseki– that burns scores of lives and billions of dollars every month. The failure to develop alternatives to oil. Trade deficits that are the natural outcome of so-called “free trade” agreements designed more to evade American law than to facilitate economic efficiency.
And, of course– the topic of this thread–a price explosion in commodities that is the logical consequence of massive deficits, artificially cheap money, and a failure of leadership in addressing pressing national problems.
Unless “liberals” have invented a time machine, it’s about time for the conservative opposition to start taking a little bit of personal responsibility. Defining McCain as a liberal despite him voting 82.3% with the ACU is a particularly disingenuous tactic.
Dilbert-dogbert,
As far as I know, both gasoline pipelines come from Texas which creates an interesting arbitrage. Also, 100% of SoCal refinery production is consumed in CA as it is. Therefore CA gas will be a function of prices paid for Alaskan crude and refinery expense. If it didn’t cost so much to send a truck full of gasoline from CA to AZ (not to mention any CA taxes) the prices would be a lot closer. If you assume a 5000 gallon tanker costs $1000 to send round trip, that makes 20 cents/gal.
On the politics: politicians should not intervene in this mess any more than they have already and I hope our next president doesn’t either. Everyone bought what they did (stocks, bonds, real estate, etc.) presuming that once in a long time things would bust. Well, it has been a long time since bust in this nation and we should be thankful. Let things crash as they may, people will rebuild the economy in whatever configuration is efficient when it is all over. Intervention leads to central planning which will never be as efficient as the free market.
Charles, there is little ‘conservative’ about Mr. Bush. Open borders, an enlarged Medicare drug entitlement, wild spending on Katrina, Harriet Myers for Supreme Court, etc.; nuts.
From a conservative perspective, the only good things President Bush has done is put Roberts and Alito on the Supreme Court and limit tax increases. His lack of vetoes on increased spending bills has been appalling. Prosecution of the war on terror has plausible arguments on both sides, from a conservative perspective.
No, unfortunately and surprising to many, Mr. Bush turned out to be much like his father, a Rockefeller Republican, not a conservative.
And, it seems to me, McPain is cut from the same cloth, too. Not good.
SRL –
The neo-cons have had their way with our fair country for eight disastrous years. Lets just recount for a moment whats gone missing during Dubyas benighted reign:
4 airplanes
2 towers
3000 American citizens
4000 American soldiers
2 million Iraqis
Bin Laden
Al Zawahiri
WMD
An historic Southern city
An 85 year old investment brokerage
A quarter of the value of a dollar
Gas at $1.47
Crude at $24.95
The homes of half a million American families
3.2 million jobs
Integrity, competence and personal accountability among our public servants
And, oh yeah, the economy of the richest nation in history.
It’s indefensible and terribly sad.
SRL is wrong, paul is right
All of Phoenix’s gas comes from two pipelines (one from Texas, and one from SoCal). Due to AZ population growth neither pipeline is currently sufficient to meet 100% of demand at ‘normal’ prices. This became much more apparent a while back when the Texas pipeline broke between Tucson and Phoenix and Phoenix gas prices skyrocketed.
As an interesting side point, California also ships refined products to NV and the PNW.
As a frequent traveler between LA and Phoenix I have often wondered the same thing Paul does. Part of the story is taxes (As of Jan 2008 AZ average gas tax was 1 cent less than Texas and 26.5cents less than CA, California charges sales tax on gasoline), part of the story is retail outlet cost structure (compare real estate prices in SoCal and Phoenix) … I don’t know what the rest of the difference is and have often speculated that it involves long-term contract relationships.
For all of you who think that one party is more responsible than the other, wake up. Both of the parties have sold you down the river. The chickens are coming home to roost. Both parties are bought and paid for by the banking industry. Just look at the votes for the Bankruptcy Law.
So wake up and smell the roses. Chances are, if you are reading this, you are better prepared for what is coming down the road than your neighbors.
So think about what is the worst thing that can happen and prepare for it. Don’t listen to people who think you are a crackpot. Calculating risk is a part of life. If the geniuses that modeled the derivatives that got us into this mess had used a true worst case scenario we would be in this mess.
Good luck to all.
I’m with Hank on this. I know it’s terribly cynical but it is clear to me that we must pray for a gridlocked government for our salvation. Unfortunately, it puts one in the position of almost certainly having to vote for the misanthropic (and misguided Iraq war strategy of)John McCain. I believe if we have a government run by all Democrats the outcome could be even worse than that of the Republican-led fiasco so aptly stated by CathyG above. If I thought that the Repubs had a chance of retaking either house of Congress I would have to think about voting for Hillary or Obama. My God what Hobson choices we face!
jg, it seems that all Republicans are conservatives until they screw up. Then the talk radio machine turns on them and defines their failures as liberalism. At this point, very few people have a clear idea what conservatism or liberalism are.
I do, and I think they have almost nothing to do with the crisis we face. The problem has to do with corruption. That, in turn, has to do with too much power being in too few hands, such that normal checks and balances as envisioned by the Founders do not function. That was the fundamental problem with central planning in the Soviet Union… and it is the same problem in a different guise if the “too few hands” are those of the ca. 5,000 officers and directors of the Fortune 500 corporations or those of ca. 5,000 Americans with net worth greater than $100M.
Finally, concentration of power in the United States could not occur without the existence of a very silly idea that “the free market” magically functions in an ideal manner. Markets, of necessity, have rules. One of the rules necessary for markets to function is that too much power cannot fall into too few hands. When a few thousand people own most of the chips, as soon as day follows the dawn, there will be corruption. economic inefficiency, stagnation, and eventually the destruction of the society.
Now, it’s true that the word “conservative” has been hijacked by radicals who are causing the destruction of this nation. Michael Lind compared them to the Bolsheviks and made a good case for it. But Bush ran as a conservative, was supported by tens of millions of people who called themselves conservatives, and is given high marks by organizations that claim to be conservative, such as the ACU. The same is true of John McCain. All of these people have sown the wind, and they are now reaping the whirlwind.
Let’s just hope there’s an America left when it’s blown over.
Is there any way to get that map as a GIS shapefile? Myself and a fellow student are interested in overlaying refinery locations, pipeline routes, and various other distribution characteristics.
Thanks for a great map! We spent about 10 minutes talking about it and wondering about its implications.
s puttnick, I don’t have the data myself, just copied a screenshot from here: http://www.newjerseygasprices.com/price_by_county.aspx Presumably they have it as a GIS file. Note that source allows you to see each county’s numbers with a mouseover, and you can also access lots of other data by poking around http://www.newjerseygasprices.com/
Hitchhiker,
Sorry Catburt had to be put down – old age and bad kidneys.
The wife and I decided that we would not reduce our fuel consumption until about $10 per gal. Life is short and at our ages we will run out of time before we run out of money.
At 10 per gallon our rentals will be producing a lot more income due to people needing to walk or take the bus to work. Lucky for us our vacation rentals are near a railroad so even they will still produce income.
McMansions in the boonies will be very low priced.
YMMV.
The fundamental problem is the average U.S. citizen has fallen under the spell of mass marketing. We all believed that we could live the life styles of the rich and famous even though most Americans can’t even manage a budget.
I watched “CENTURY OF SELF” and it changed my life and the way I look at everything.
http://freedocumentaries.org/film.php?id=140
dilbert, I figured that was probably the case. You can’t take it with you, might as well enjoy it.
charles and cathyg, you both seem to put a lot more faith into our government than I do. You also seem to think they have ultimate power to control everything for our benefit. They do not. cathyg is just out there. Charles, I apologize for politicizing the thread. Just sharing my fears.
For the record, I call conservatives those who believe in individual liberty and liberals those who believe in the state. Most people fall somewhere in the middle but, my fear is that the majority has come to put their faith in the federal government and that is not good. Cathyg is the perfect example. She will blame Bush if her bulbs fail to come up this spring. The trend towards statism is a liberal trend. The term liberal has changed over time and now is used to represent socialists.
Imo, we have only elected one conservative president in my lifetime. I am 46. The number of conservatives in congress is fairly small. A republican is not a conservative. Ideologies and political parties are two different things.
If you choose to accept that the federal government is simply a large bank account and politics is the method we use to allocate funds, then you are a liberal regardless of party affiliation.
jg, to paraphrase Inigo Montoya, that word does not mean what you think it means. The definitions of liberal and conservative have been constant for several centuries. To quote Wikipedia:
“Liberalism refers to a broad array of related ideas and theories of government that consider individual liberty to be the most important political goal.[1] Modern liberalism has its roots in the Age of Enlightenment.
Broadly speaking, liberalism emphasizes individual rights and equality of opportunity. Different forms of liberalism may propose very different policies, but they are generally united by their support for a number of principles, including extensive freedom of thought and speech, limitations on the power of governments, the rule of law, the free exchange of ideas, a market or mixed economy, and a transparent system of government.[2]”
By contrast (again, quoting Wikipedia), “Conservatism is a term used to describe political philosophies that favor tradition and gradual change, where tradition refers to religious, cultural, or nationally defined beliefs and customs. The term is derived from the Latin, com servare, to preserve; “to protect from loss or harm”. Since different cultures have different established values, conservatives in different cultures have differing goals. Some conservatives seek to preserve the status quo or to reform society slowly, while others seek to return to the values of an earlier time, the status quo ante.”
The latter is actually called “reaction,” but you get the idea.
Are people who call themselves liberal actually liberal? Or are people who call themselves conservative actually conservative? Human beings being human beings, there is often more inconsistency than consistency. But there is a consistent philosophical thread from Jefferson to the woman demanding the right to decide, in combination with her doctor, whether or not she wants an abortion, just as there is a consistent philosophical thread from Burke to the member of the Christian Right arguing that the state should illegalize abortion. A straight line from Adam Smith to John Edwards arguing for regotiating NAFTA to incorporate wage and environmental standards, just as there is a straight line from Hamilton to the Bear Stears bailout (or wipeout, if you prefer).
So, it seems to me you have your definitions almost exactly backward. The concept of liberalism is of maximizing individual liberty, where necessary *using* the state to enforce rights. The concept of conservatism is of constraining the liberties of the masses. As Burke was quoted in the Wikipedia article, “We are afraid to put men to live and trade each on his own private stock of reason, because we suspect that this stock in each man is small, and that the individuals would do better to avail themselves of the general bank and capital of nations and ages.”
I’ve lurked here for about 18 months and this is the strangest thread I’ve run across.
Not sure if this is liberal or conservative but sure seems accurate:
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess of the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship….”
Sir Alex Fraser Tytler
Footwedge, that’s the basic view of the Federalists. Again quoting Wikipedia, “Ideologically the controversy between Republicans [i.e., Jefferson’s party, the modern day Democrats] and Federalists stemmed from a difference of principle and style. In terms of style the Federalists distrusted the public, thought the elite should be in charge, and favored national power over state power.”
Our nation happily is, or at least was, a balance between small d democratic principles and small r republican principles. Without the democratic principles, power is concentrated into few hands and the system falls due to corruption. Without the republican principles, disputes are settled by votes rather than by law and precedent.
Halfempty, please note: understanding these ideas is central to the *economics* of this thread. Our system has begun to fail because economic power has become political power. The political system is not responding to massive fraud against borrowers by financial institutions, even though fraud *by* borrowers is prosecuted vigorously. Rather, public funds are being used in a manner unprecedented (at least post-WW II) to restore financial institutions that may well have perpetrated fraud. Similarly, the airline merger activity is the consequence of stagnant/declining real incomes.
As Bob Kuttner has pointedly noted, the discipline used to be known as *political economy* back in the days when people understood that it was not fruitful to speak of economics without separately understanding politics and vice versa. Now that the discipline has become *economics*, the politics has become embedded in the worldview– often in ways that obscure what is really going on.
Have to come in with some real data re Cal gasoline prices. CA is extremely refinery deficient. Regulations effectively prohibited new construction decades ago. As a result any tiny hiccup in output produces a jump in prices. As expert witnesses we proved that a refinery fire in NCAL a few years ago was PROFITABLE because the small reduction in output was more than compensated for by the resulting increase in prices.
RCC
Dear RCC: Please explain how CA refinery capacity explains current CA gas prices when 2007 CA refinery utilization factor is lower than any year since 2000 and not appreciably higher than any year since 1989. Also explain why CA supplies the rest of PADD 5 with refined products (one assumes it would be easier to refine outside of the bounds of CA’s onerous refinery regulation). Also explain why refinery capacity has increased in CA? Also explain what would prevent refined products from reaching CA’s long coastline when crude seems to make it OK?