Reply #66: Not Even The Long Run

[ProfessorGAC]

It's already crimping the growth of real GDP. Remember that the idiots who adhere to conventional economic theories don't include direct fuel expenditures in inflation values. (Too hard, they say. Statistical inferences, however, would be simple to obtain. But, no!)

Today, the average person (15k miles per year, 25mpg) will pay nearly $1,500 dollars for gas this year. The same value in gasoline, just 2 years ago would have been less than $1,300. That's $200 per year per average american that is NOT being used to buy anything other than fuel.

Take that number times about 80 million households, times 2 drivers per household (all averages) and the total economic impact on discretionary spending at the retail level is about $32 billion dollars. That's 0.3% of GDP that is not buying anything extra. Since the growth rate is only about 5% nominal, that is 6% of the potential overall growth that's being eaten up by gasoline price increases. Since the price of gas is IN the GDP calculation, the growth will seem the same, but $3 out of every $1000 is now not buying things we used to buy.

That's not long term impact. It's happening as we speak.
The Professor