I’m seeing opposing signs on consumer moods this month. The good news first: there is an increasing level of activity at retail, and an increasing number of consumers have paid off their credit card debts completely. Now the bad news: Employment prospects are not improving, and energy prices are increasing. The total number of people employed is going up, but the net number of new jobs is tiny compared to the number of new high school and college graduates entering the work force. More people than ever are working at jobs that are temporary and part-time. There are more discouraged workers, people who want to work but have given up trying, than ever.
Energy prices are creeping up slowly, but I think consumers have figured out that gasoline prices are being held in check by the dismal employment picture. If we had 10 million more people driving to work, the price of gasoline would be $5 a gallon again.
The catch, of course, is that if energy prices revisit their recent peak levels, that will be enough to bring the economy to a stop, the same way it did before. People can’t help having a “here we go again” feeling when they foresee gasoline prices inching up past $3 a gallon next month. After all, the last time gasoline went over $3 a gallon was May 2007, and within months, it had become obvious that the economy was falling apart.