People Are Flipping Out: California Is On The Brink Of Collapse And The Panic Is Quickly Spreading Throughout The Nation! Will It Be The Catalyst Of An Impending Market Crash?

Sunday, October 7, 2012
By Paul Martin

Investmentwatchblog.com
October 6th, 2012

California is experiencing:
Budget Shortfalls
High Unemployment
Pensions Problems
Cities Filing For BK
Now Gas Shortgage

2010: Every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year. The move in oil in the past week alone has almost entirely wiped out the most recent stimulus.

Investors — certainly U.S. stock investors — would be wise to keep one eye on the price of oil, currently pushing $90 per barrel. Oil traded up 10 cents to $89.29 on Monday at mid-day.

And the reason is obvious enough: once again, oil is approaching the danger zone, from a U.S. GDP growth standpoint.

No one knows precisely at what point oil begins to substantially hinder consumer spending and slow commercial activity — but this much is known: every $1 per barrel rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year.

If the average U.S. price of gasoline, currently about $2.94 per gallon for unleaded regular, rises and stays above $3, that would cause consumers to think that ‘higher gasoline prices are ahead,’ and they’ll likely adjust their discretionary spending. Similarly, an oil price that rises and stays above above $100 per barrel has a similar psychological effect.

The rest…HERE

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