Wednesday, August 04, 2004

 

High energy prices stifle spending.


The price of oil per barrel created new records today, with some economists fearing prices reaching $50 + per barrel in the near future. The impact has yet to be fully felt in the American economy. One of the misleading effects of government reports regarding inflation of consumer prices is those reports exclude energy costs, which are real costs for American consumers and businesses. The California energy crisis of a few years ago increased energy prices across the board...including other states. Now we've found out the increased prices were artificially created by Enron! America has yet to pay the full price for this corporate scandal.

SUV sales continue to slump and the deep discounting auto makers are making to keep sales going will hurt the bottom line and in turn worker's jobs. The Bush tax breaks and refinancing at lower rates have kept more money in American's pockets over the past year, but the increase in fuel prices has eroded this extra money.

In the wake of increasing fuel costs, American companies can no longer absorb those costs as a part of doing business. If fuel costs continue to rise, we should expect consumer prices overall to reflect that increased cost of doing business.

In other news, weekly unemployment reports are due out tomorrow, while July's are still slated to be released on Friday. Most experts believe the numbers should be good. We'll see tomorrow.

This economic report brought to you by the University of Phoenix.

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