The Real Estate Espresso Podcast What Falling Gasoline Prices Tell Us?
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On today’s show we are talking about something that has happened in the macro economy that is not getting much attention.
But first, I’d like to invite you to a live demonstration of our new custom language model which we are affectionately calling VictorAI. This is our own custom language model which is built on top of ChatGPT. We trained VictorAI with the contents of the Real Estate Espresso podcast and my book Magnetic Capital. It’s the difference between going to a family doctor versus going to a specialist. The specialist is always going to give you a more precise answer. Click on the link in the show notes and we will talk to you on December 16.
On today’s show we are talking about something that has happened in the macro economy that is not getting much attention. You have probably noticed that prices at the gasoline pump have been falling. That is usually welcome news for consumers.
Politicians will probably be quick to take credit for this. Prices in the oil futures market are set by a combination of supply and demand. The futures price for crude oil is what gets the most attention. Today the WTI intermediate price for January delivery is $57.44 per barrel compared with $72 at the start of this year.
Whenever something happens you have ask yourself whether you are looking at the cause or the effect. Falling prices at the pump are effect and not cause. The cause is further upstream in the economy.
Falling gasoline consumption reflects falling demand which reflects economic weakness. You’re not going to get any politician to come out an use the word recession. That’s going to guarantee a loss during the midterm elections which are now only a year away. Instead, they will trumpet a victory of lower gasoline prices at the pump which are helping ordinary households.
The American consumer has suffered very real loss of purchasing power since the pandemic. Most of this has been the result of the handling of the pandemic and the government response to the pandemic. Labor shortages in the wake of the pandemic did not translate into greater purchasing power for the average consumer.
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