Gas for $1.75 a Gallon & Depression Level Unemployment…The USA After an Euro Collapse
By Daniel R Amerman CFA
The USA After an Euro Collapse
The US dollar could soar in value. Gasoline could return to under $2 a gallon, possibly even $1.75, and filling up a near empty tank could once again be done for under $30. The prices of clothes, shoes and a shopping trip to Wal-Mart could drop significantly, providing much needed relief to retirees on fixed-incomes. In the midst of global economic crisis, there could be an “Indian Summer” in the United States with a return to cheap oil and abundant imports at prices well below current levels. Standards of living could briefly rise – for those fortunate people who still have jobs and/or stable incomes.
As pleasant as it could be for some, this potential “Indian Summer” won’t change the bigger picture. If the Euro collapses (and that’s a big if), the end destination will likely be disastrous for the US economy, US employment and the value of the US dollar. For a US economy that is already reeling – the fall of the Euro and a corresponding implosion of European economies could take a bad situation and make it much, much worse. The brunt of this damage will be borne by the many millions of newly unemployed as well as retirees and investors, but many more will bear the pain.
However, the journey from a full Euro meltdown to the end results for the United States may take longer than many expect, and the particulars of the path could also take many by surprise. In this article, we will speculatively explore some of the potential twists and turns between Euro collapse and US economic disaster, and the economic logic that may drive them.
Starting Assumption: Euro Collapse & European Depression