Austan Goolsbee, Obama’s relatively recent replacement to Christina Romer as top economic advisor, seems to have caught that small Grumman Widgeon seaplane and booked himself a one man vacation on Fantasy Island.
“The sensitivity of the economy to oil prices is not as great as it was in the past,” Mr. Goolsbee told reporters at a breakfast sponsored by the Christian Science Monitor. “The impact of oil prices comes from long-run, sustained increases to prices, not from short-run variations.”
Still, while Mr. Goolsbee noted that “nobody likes to pay higher fuel costs,” he did not appear overly concerned by the recent price jumps. (emphasis mine)
“Anything like what we’re seeing so far — neither we nor the private sector has forecasted that would derail our recovery,” he said. (emphasis mine)
My first thought? What recovery? Nevertheless, I’ll move on.
Did Mr. Goolsbee just say that the recent rise in oil prices won’t affect the economic recovery? Really? Because everywhere I look, like here, here, here, here , here, and here all say the exact opposite. And even if some economists say that we’ll have to reach a sustained $120/barrel to hamper the supposed recovery, I’ll speak from the viewpoint of the average consumer having to pay for the gasoline that enables me to get around.
These recent gas prices hikes (somewhere in the region of at least 20 cents per gallon in the last couple of weeks) are already affecting my mental state. Combined with rising food prices, the latest price at the pump has me pondering the necessity of little trips and stops where I would be spending my money and helping our consumer driven economy along. Additionally, even if the price spikes in gasoline we’ve had recently recede, I’ll still be thinking twice about being more free-spending with my cash than I was just a few months ago. If prices can escalate so quickly with no warning to the average consumer, it makes me want to save even more cash, if possible, and leave those discretionary purchases on the shelf at the store.
So Mr. Goolsbee, you may not be concerned about the current state of fuel prices while drinking your little drink with the tiny umbrella in it and lounging around on your little fantasy island, but as a consumer in flyover country, those fuel prices are already affecting my household’s recovery.