Jan Hatzius at Goldman touched on this in March...
Posted on: May 5, 2012 at 10:49:35 CT
"Why is our forecast for GDP growth still so muted? Apart from weather and seasonal issues, which are probably less important for the GDP data than for the labor market and the CAI, there are two reasons. One is that indicators of final demand still look quite soft. Final demand (GDP less inventories) grew just 1.1% in Q4 and an estimated 2% in Q1.
The other issue is oil. Our models say that a 10% seasonally adjusted gasoline price increase—roughly what we have seen since the second half of 2011—should take an average of 0.4 points off annualized growth over the following year. That's not yet a huge effect, but it is the sort of magnitude that starts to matter from a forecasting perspective. We also don’t think that the low level of natural gas prices will offset much of the increase in gasoline prices; as we showed recently, household and business expenditures on natural gas, evaluated in terms of the commodity cost, are only one-ninth as large as expenditures on oil and oil products as of 2011. This means that changes in oil (and especially gasoline) prices are nine times more important than proportional changes in natural gas prices."
While I can't dispute the labor numbers, I think that's just one part of the overall problem, and not even the major issue to be addressed to strengthen the GDP. We've got to stimulate demand, first and foremost, kbit. Get the butts in the stores, so to speak. Gas prices are killing us here, but easing up a little the past few weeks.
Entertainment industries are actually doing ok, even in yesterday's job report, meaning people are trying to get out and spend money. That's a difference from 12 months ago.
What that doesn't mean is further tax cuts targeted for the so-called 'job-creators". They don't need more money to create jobs--they need more customers coming through their doors. And most will tell you just that.
Nothing the Republicans offer in the Ryan plan gets those butts in the stores...
Edited by Bluestrike at 11:35:50 on 05/05/12