Radical Noesis - Thinking outside the box

One has to ask "Whose economy is booming here?" because it certainly isn't the public's economy. This is made clear in the ("unexpected") 1% jump in inflation for July. As noted in the August 16, 2005 Washington Post article July Inflation Jumps on Higher Gas Prices: "Consumer prices rose faster than most workers' wages last month as energy costs surged again, the Labor Department reported today." So once again, whose economy is "humming?"

If the cost of living goes up faster than your pay, then you are going to spend less. According to the WP article, prices were 3.2 percent higher in July than a year ago. Other reports I have heard also signal something different than a "robust" economy. How about this report from the Birmingham News Retailers feel pinch of rising gas prices? The article reports that Wal-Mart has decreased sales and profits. Who shops at Wal-Mart? Those who have the least discretionary income to play with. Those who are likely hit hardest by increasing fuel costs. Wal-Mart is not the only retailer experiencing pressure - Big stores suffer as high oil prices bite.

Watching the news is an interesting critical thinking exercise. On Tuesday, the reports were that the New York Stock Exchange dropped 120 points. On Wednesday, we are told that the market "bounced back" - it was up 37 points. I believe that is hardly a rebound as it is still 73 points off its Monday starting place. The escalating gas prices are making the news on a regular basis. Following a report on price increases, and gas wars between filling stations, a reporter notes that the US is using 12% more gas this year than last. Might that have something to do with Ford and GM offering "employee discounts" to get the gas guzzlers off their inventory?

Perhaps folks are feeling buyers remorse, as there has been a 50% increase in the number of SUVs at autotrader.com In a TV interview, I heard they have 1 million of them listed at the site. The power of advertising is clear in the following report, as is consumers' confusion over reality:

I want my SUV

According to the Web site abouttrucks.com, the 2004 Hummer gets about 9.6 miles per gallon in the city and nearly 12 mpg on the highway.
"I didn't really take the gas mileage into account when I bought the vehicle and I haven't thought much about it since then either," Haverhill said. "I wanted a Hummer and that's what I bought."

...

"If I weren't driving this, I'd be driving something else and using gas," Haverhill said.

OR
"The gas prices are crazy, there's no doubt about that, but we never even gave it a thought when we bought this," Ferreira said, of purchasing the vehicle two months ago. "Even with these prices, it wouldn't have changed out minds."

OR
"With the gas prices the way they've been, the only way I can see any of this changing is if fuel gets short in supply," said John Paul, referring to the Arab oil embargo of the 1970s. "You see these people buying these vehicles and instead of asking about fuel economy, they're asking if it has a Hemi."

As an SUV commercial asks "Why rule the road when you can rule the planet?" Are SUV and big truck purchases a psychological prop for power and control in a world where folks are feeling increasingly powerless and out of control? Or is it a belief that if you pretend hard enough it will come true.

Does the cost of oil make a difference? You bet it does. You can finance your new 2 ton truck, but you can't finance your rent. So finance the truck and live in it. If you "believe" hard enough, maybe the gas prices will come down enough to actually get that SUV out of the driveway.