The Obama problem
US Pump prices, Jan 2008 to Jan 2012, a measure of US demand.
Crude prices, Jan 2008 to Jan 2012, a measure of world demand.
US Workforce, Jan 2008 to Jan 2012, a measure of overall economic strength & wellbeing.
US Pump prices, Jun 2000 to Jan 2005, a four and one half year period beginning in Jun of an open seat presidential election; note a price recovery from the 3rd quarter of 2003.
Crude prices, Jun 2000 to Jan 2005, again, note a rapid recovery in world crude oil prices from the 3rd quarter of 2003 breaking above all previous highs.
US Workforce, Jun 2000 to Jan 2005, growth in employment after a recession beginning in the 3rd quarter of 2003, just prior to an incumbant presidential re-election bid, spurring rapid increases in both world and US demand for petroleum products.
Another way of looking at it
U.S. Employment 2003 - 2009
from trough to peak. In this period total employment rose 8 million, from 130 million to 138 million, and declined with the onset of recession.
U.S. Pump prices 2003 - 2009
(semi-annualized). Paralleling the growth in employment, U.S. pump prices rose more than
double in the same period, and demand (i.e., the price) peaked at precisely the same moment employment peaked.
U.S. Population growth, Employment, and the Money Supply
Background. From mid 1999 until Mar 2012 the U.S population grew from 280 million to 312 million -- more than 10% -- or 32 million persons.
U.S. Population Jun 1999 - Mar 2012.
U.S. Employment Jun 1999 - Mar 2012.
In the same period only 3.5 million jobs have been created. In fact
, the U.S. workforce in Mar 2012 is the same size it was at the outset of 2001. While population has grown 32 million in eleven years, only one job has been created for every nine persons in population growth.
Meanwhile, the U.S. has suffered two recessions, with virtually no employment growth yet increasing population demands. While productivity gains, output per man hour, and overall employment have been static, the U.S. Money Supply (M1, cash in circulation + checking accounts) has seen wide swings in growth -- as much as 10% during the 2001 recession and years following, and now 20% increases following the 2008 recession.
U.S. Money Supply Cash in circulation plus checking accounts
(annualized percent increases from prior year).
If employment and productivity increases have been negligible to static for eleven years, what can justify increasing the quantity of money in circulation by $1 trillion ($1000 billion), and ($800 billion of that in past three years?
U.S. Money Supply.
Aggregate base in billions of dollars. From the end of the 2001 recession until the start of the 2008 recession, the quantity of cash in circulation (basically, to fund the Bush Tax Cuts and create new jobs) rose from $1.2 trillion to $1.4 trillion. By this measurement (M1) the amount of cash in circulation (Federal Reserve Notes, checking deposits, etc.) has increased from $1.4 trillion to $2.2 trillion as a result of the TARP program bailouts, Obama stimulus, and federal deficits. The increased quantity of cash in circulation should ease the problem of gas pump prices rising above $4 per gal, unlike in 2008, when the high prices strangled the US economy and was just one of several factors throwing the US into recession.
The increased quantity of cash in circulation is hoped to ease the "pain at the pump" that Americans felt in 2008 when $4 per gal gas helped strangle the U.S economy. This time around, there are already enough Federal Reserve Notes printed up in storage in bank vaults awaiting circulation. The pump price should be able to blow past $4 and even $5 per gallon without creating a cash shortage and upward pressure on interests rates.
However there still are remaining problems with a net export of U.S wealth to foreign countries to pay for U.S. domestic gasoline consumption. This net export of wealth comes in direct competition with (a) repaying foreign borrowings to operate the U.S. government; (b) interest on the debt; (c) continued job creation and a sustained economic recovery.
There are only two pools of capital that can be drawn upon to create jobs: (1) national savings (total output minus consumption), or (2) foreign investment (what is borrowed from abroad or invested in the United States by foreigners). Even prior to the 2008 Recession, the United States national savings was insufficient to maintain job creation at a pace consistent with population growth. The U.S.'s status as the worlds largest debtor nation was rapidly increasing.
UK sinks back into Recession
After massive stimulus and desperate bailout measures, by April 2012 the United Kingdom had already officially sunk back into a dreaded Double dip recession.