“Even
though America’s drove more fuel-efficient cars and consumed less fuel than
ever in 2012, an Energy Department report says households spent almost 4
percent of their pretax income on gas – the highest percentage in 30 years.” – Los Angeles Times
As
we continue our watch for potential storm clouds on the horizon that could
derail the equity market rally, the gasoline price surely rates as one of
them. An unnaturally high fuel price in
mid-2008, after all, was one of the catalysts to the broad market and economic
collapse of that year. Since the
recovery started in 2009, each time the retail gasoline price has threatened to
exceed the psychological $4/gallon, stocks have been knocked down and retail
sales begin to suffer. At the present
time the nationwide retail gasoline price is averaging $3.60.
The
following chart show the futures price of gasoline, which forms the basis for
retail prices. It has been in a clearly
defined upward trend since November and threatens to break above the highs seen
last winter. Is it too early to be
concerned about a gas-related economic reversal?
Our
in-house New Economy Index (NEI) measures the strength of the U.S.
retail/consumer economy in real time.
It’s currently telling us not to worry about the near term economic
outlook, which is clearly still up. As
long as this constructive trend remains in place we needn’t worry too much
about the gasoline price. If the NEI
reverses at any time in the next few weeks, however, it will definitely be time
to increase our defenses in anticipation of a potential gas-related economic
downturn. For now, at least, consumers
seem to be at peace with current gas price levels.
No comments:
Post a Comment