numbers lie, part 2: a report from the epicenter

since this gas crisis started, i've been monitoring the price change from a gas station sign that i pass on the way to work. here it is on google street view, with gas just above $3 whenever that picture was taken (likely last year). three weeks ago, it was somewhere around $3.80/gal for regular. yesterday on my way home, it had jumped from $3.97 to $4.03. oil jumped another few bucks today, so i could see it pass $4.05 as early as 5:30ish today when i see it on my drive home.



the fine folks at digg pointed me to this piece from the times of london, in which the author argues that based on important economic indicators, america is not in a recession, and if it makes it another couple months, it won't really ever be. while this article is dated april 7 and therefore fairly obsolete, i still think it is worth mentioning. firstly, we're at the point of no return where he assumes that we're ok as long as the numbers jive; secondly, i think he's flat-out wrong.

mr. kaletzky presents three arguments for why a recession is not happening.

1) "...figures [he has cited] are still consistent with a mid-cycle slowdown similar to the ones that the American economy experienced in 1995-96 and 1986-87." these include unemployment numbers, gdp figures, and other numbers argued by people who are looking for the conventional definition of a recession.
2) "powerful expansionary forces are about to come into play in the US economy in the months ahead...every American household will receive tax rebate cheques of between $600 (£300) and $2,000. As a result, personal disposable income will grow at an annualised rate of well over 10 per cent in the third quarter of this year."
3) "...there is a world of difference between a dislocation confined to one or two parts of the economy - say, housing and mortgage lending - and a generalised economic decline in which the weakness of demand in a few sectors creates a self-sustaining downward spiral of falling employment and incomes..."

mr. kaletzky, let me express my opinion on this in a way you can understand:
BOLLOCKS.

this assessment heavily underestimates the problem of the housing crisis, and completely sweeps a couple of major factors of this recession under the rug. first, how do you expect gas prices over $4 not to affect a way of life in an area that is particularly dependent upon the automobile, both in terms of culture and infrastructure? secondly, he has been conned by this stimulus package, hook, line, and sinker. the stimulus package is a false "expansionary force," meant to alter numbers so that well-educated fools like kaletzky don't start proclaiming recession. make no mistake: the confluence of factors in this crisis will do significant damage to the american economy, most notably in the southwest.

kaletzky's article is ivory tower speculation of the highest order, and i suspect he would sing a different tune if he spent a week or two living in southern california. while i hate to pull a hillary clinton by dismissing 'expert' opinion in favor of blue-collar pathos, i'd like to present a couple of socal slice-of-shitty-life stories to counter this concept that we are not in a 'recession':

cnn tells the sad tale of barbara harvey, a 67-year-old mother of three from santa barbara who is now homeless after being laid off, and then foreclosed. while she no longer has house payments, "she still cannot afford an apartment, and so every night she pulls into a gated parking lot to sleep in her car, along with other women who find themselves in a similar predicament."

isolated incident? not really.

There are 12 parking lots across Santa Barbara that have been set up to accommodate the growing middle-class homelessness. These lots are believed to be part of the first program of its kind in the United States, according to organizers.

additionally, bbc reported a couple of months ago on the establishment of a 'hooverville' - a depression-era shantytown for the dispossessed - in the los angeles area. surely, after another couple of months, this has only grown:



am i looking too microscopically at this? should i not care about these homeless people, ignore how much i'm paying at the pump, and forget that bread and milk cost twice as much as they used to? i sincerely doubt it. shame on you, mr. kaletzky, for doing exactly that.

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UPDATE: $4.05? nope. $4.13. god help us.