I would suggest you have a more productive view of the economy than most.
Well, I wouldn’t say we’re all that upbeat. We’re not looking for recession. We’re looking for 2 percent-type growth this year. But certainly the numbers, while they’re weakening recently, haven’t collapsed. And on the positive side, and this is a big contrast with Europe especially, our banking system is expanding. Delinquency rates have been coming down, and U.S. banks have been lending again.
People going to the grocery store are seeing food prices increase. Won’t that show up in indicators like personal spending?
These food inflation numbers are running at about 2.5 percent year-over-year right now. Food is 14 percent of the CPI. It’s not going to make a huge difference if you add 1, 1.5 percent to that. It’s a bit of a boost to the inflation numbers, but not a huge, huge amount.
We’ve seen AAA gas prices in the U.S. now climb to $3.50, up from the low of $3.32 just last June. Is this something that starts to bite more?
The net of it, though, in the last four or five months is a big drop in gasoline prices. I don’t think we’ve seen the benefit of that drop yet. And of course the savings rate is back up a little bit. I think there’s a little bit of spending power related to that net drop in gasoline prices which will help in the third quarter.