Friday, January 6, 2012

My View

Random ruminations from your resident curmudgeon...

Welcome to 2012's new mascot, and just as our furry friend is intently focused on the kibble that is being tossed his way, we are going to intently focus on some important issues as well as have some fun in 2012. It goes without saying that this is going to be a very noisy year with the Presidential election in November, and there are numerous issues, both political and economic, that will be decided that will determine the direction of our country for a long time. With all the hype and hoopla, it is easy to just want to tune it out, but like our canine companion, we are going to stay focused on the kibbles, uh, issues. Hang on for the ride, because it is going to be an interesting year.

When people ask what is the one thing you would bring to a deserted island, I think the answer would be obvious. A boat.

There is going to be numerous economic numbers thrown about this year, originating from various departments of the government. Two of the most watched are the unemployment numbers and the Gross Domestic Product (GDP), which measure the growth of our economy. Here is a piece of advice about the data that is disseminated by federal agencies: take it with a grain of salt. Here is why. Those initial release of numbers are from raw data that is recalculated, refined, and re-worked to give the actual information. Here is an example: the third quarter 2011 GDP was released, and initially, it was reported that the U.S. economy grew 2.5% in that quarter. That is good growth, and the news was received positively in the markets and used to make political hay by both parties. But wait, in November, the number was revised down to 2%. Not done yet, the number was finally revised down to 1.8% in late November, a full 39% below the initial release. Imagine if a publicly traded company published information about the sales and growth of their firm that was as erroneous as this. Regulatory agencies would be absolutely apoplectic. Yet we tolerate it from our government. The take away from this is simply don't get too excited about the first release of the information that comes out of Washington. Although it will be spun by either side for political gain, more often than not, the data is inaccurate.

Is it my imagination, or do buffalo wings taste like chicken?

At the start of the new year, many of us start to gather information about what we spent last year and formulate a household budget for the coming year. If you have that financial discipline, one item that you may want to increase in your budget is the cost of gasoline for your vehicle. In 2011, according to a report on CNBC, gasoline averaged more than $3.50 per gallon, meaning that the typical American family spent $4,155 filling up their autos. That is a record, and represents 8.4% of the median household income in the U.S. That is the highest percentage since 1981. Part of this is because the demand for crude oil is rising globally as more emerging economies have populations that are purchasing automobiles. The other part is the failure of the United States to adequately develop the natural resources that are within its own borders.  The double negative effect of the high cost of gasoline is this: it takes dollars that could be spent in other areas to help grow the economy and removes them from circulation; and in turn, those dollars are sent overseas to other countries. In essence, we are transferring our wealth outside our borders. Think about that the next time that you fill up. More importantly, think about it the next time someone in Washington continues to impede the development of our own natural resources.

Clothes don't make the man, but being naked will get you arrested.

And that, my friends, is my view.

No comments:

Post a Comment