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Goldman "Solves" The Lack Of Cheap Gas Consumption "Puzzle" - Spending Set To Rise... Just As Gas Prices Surge
Goldman, as well as everyone else, was dead wrong when it predicted that the tumbling gas prices are "unambiguously good" and would unleash a wave of spending unseen since the Lehman collapse - because all those "gas savings" had to go somewhere, right? Instead, what happened was that retail sales disappointed 5 months in a row, and personal spending data that has consistently missed expectations.
So now that the plunge in oil, and gas prices, is history, what does Goldman do? Instead of admitting that like every other economist, it was wrong in expecting a surge in spending, it take a deep look at the "consumption puzzle" and concludes that the spending boost is merely deferred.
But before we dig into the humor, we should note that Goldman isn't entirely wrong. It does observe that "the puzzling lack of impact so far is likely explained in part by consumers' initial skepticism that low gasoline prices would last. As Exhibit 2 shows, only over the last couple of months have consumers come to believe that lower prices are here to stay."
Then Goldman does the "economist" thing: it goes full retard.
How puzzled should we be by the absence of a boost from cheap gas prices so far? To answer this question, we use a range of models to estimate the usual time pattern of the consumption response to changes in energy prices. We find that low gas prices should have boosted Q1 consumption growth by 0.5-1pp, reinforcing the Q1 disappointment. However, the models also imply that only one-fourth to one-half of the eventual consumption impact should have been felt by Q1, suggesting plenty of remaining upside in coming quarters.
And even provides a pretty chart that should somehow justify it being right when it was already so massively wrong:
But while we can't confirm if Goldman is merely wrong about consumer expectaions of future gas prices, as it has been wrong about everything else, or if indeed consumers are merely confused, one can easily ignore all of the above because there is one simple problem with all of Goldman's assumptions shown above.
To show the problem, we will present a chart of our own, one which shows why either consumers or Goldman, are wrong in expecting that the household spending surge has been merely "sidelined."
Exhibit A: gas prices, year over year, in the largest US market: California. At this rate, the great "gas price plunge" of 2014 will be a distant memory within 2-3 weeks.
Which is great news for economisseds: they will be able to blame not only plunging gas prices, but also soaring gas prices, on having been wrong about everything, all the time. That, and demanding that a third seasonal adjustment be applied to any piece of "data" that does not conform with the permabullish narrative.
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High Prices. Spend. Low prices. Spend. What a fucking joke !!!
Has it always been doubletalk like this. Or only in last 5 years since I have been coming to ZeroHedge ???
Either way. I am fucking sick of double talking. Working the numbers backwards. Lying hypocrites. Blow this thing up now !!
If there are economists involved, there is always double-speak. And, by the way, nobody boosted spending because they were saving up for their Obamacare payments (and/or a lack of a tax refund from paying the Obamacare penalty.... er, um... tax). Yes, boys and girls, taxes went up and ate the spending. Shocker.
Imagine if gas prices HADN'T dropped. What do you think the numbers would look like now?
-An Economist
Infinite Renewable Electric Energy, coming real soon! (No joke)
Goodbye Oil & Gas, like forever....
Here is one of the technologies already being implemented...
http://www.marketwatch.com/story/lucid-energy-announces-portland-water-p...
Tesla? Is that you?
Nope, just the second coming of "cold fusion".
Hah ha ha ha
"New Age" scam-like sell of simple gravity fed turbine power, FFS, folks
Barry and Ernie Moniz would love it! "Tell me, how does it work? It's a game changer! We must start a program training inner city folk to build this."
PS Goldman: If the model don't work, it ain't a model, dipshits.
Got Hockey Sticks?
Yes, this is brilliant!
All I need to do now is convince my local water authority to get its water from a mountain reservoir instead of the wells and flat elevation reservoirs it currently uses...
Also, I cannot think of any possible probelms coming from putting a rotating obstruction in our water mains, so this seems like a fool-proof plan.
We've been here before.
And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.
http://trueslant.com/justingardner/2009/07/03/matt-taibbi-blows-the-lid-...
Extremely limited application of four 42" turbines, wow.
Either use the /s or work on your ability to discern the scale of all things important.
Goldman: Our models don't agree with reality. There's something wrong with reality!
Easy there... I know you were just kidding about "Blowing things up"..
Because otherwise someone might be tapping on your shoulder asking if you are really serious about it because they know a guy in a windowless white van that has some stuff that will do just that. All you need to do is correspond with him over your email address for a few weeks implicating yourself in your plan to "blow things up". Be sure to put that in the subject line. He will then meet you outside your target to case the joint and make your final plans, as he delivers to you the material and mechanism to "blow things up".
Don't do it. Its a trap, and will only be used to justify more jade helm exercises and DHS spending on JHP rounds that can pierce car doors.
It might be better to understand that its not so much what goldman asserts and supports and the nature of the evidence they use to support it, its what they can't assert or support and the reason they can't. Understand their biases and tear their arguments apart, and then form your own based on what you know.
And then, be very patient. Painfully patient.
And watch the show. Knowing it must get worse before it gets better. Always. And it will only get better after the people around you recognize it and start commenting on it, and start to come around to opening their eyes. But it will be awhile.
There is a "secret" building in Chicago for guys like him.
shhhhhhhh
Consumers are strapped! Unlike Goldman, they can't feed at the Fed pig trough as they endlessly fabricate new money in the computers. Yeah, hard to believe that some people must WORK for their daily bread rather than tap into the Fed's "wealth effect" money-printing machines!
Bablyon shall fall -- AGAIN!
The problem here is that these assholes are letting the equations determine the outcome, instead of good old-fashioned common sense. They pull the wool over their own eyes.
Garbage in, garbage out.
Like telling the masses things are getting better as far as employment. Look around.
Well, it was fun while it lasted anyway.
Oh, that music. Can I take this chair home?
I feel that I am association with the wrong crowd.
These twits are making money hand over fist, by just writing about being a twit.
Who the fuck cares about gas prices when you control money creation
"Economissed's"
Well played Tyler(s).
This article was worth the read just to coin the new phrase "economissed". Gives "bankster" a run for its money (pun very intended).
Actually I like anal yst better but I'm personally biased.
Miffed;-)
i thought it was understood that all the savings from cheap gas went to pay for increase in obamacare?
But, what they've found out is that the majority of the plebs are signing up for medicade or need subsidies.
GS, JPM, BAC, etc need to be brought to their knees. this ignorance and self-entitlement will only grow as these fucking bastards spawn more more retards that will never work a day in their lives and then plug numbers into models that have no basis in real life.
Can't blame anything in California on snow..... Too soon?
I have come to realize that California is an important key to dismantling the middle-class in order to break down the major barrier to the One World Economic System (OWES), which is the middle-class. California is a large economy within the US and the HAARP induced drought (4yr high pressure over California) will eventually turn California into total chaos and will affect the rest of the nation. These are perilous times, but it is a slow burn from the human perspective in a world that "can't wait" or "wants it now". We see the future clearly, but for many it can't happen fast enough, but that is to be ignorant of the deadly impact that is heading directly for many of us.
Lower gas prices should have an effect on the consumer, but only to the extent that the goods and services pass along their fuel (delivery) savings onto the consumer, but they have not! In fact, prices for food and clothing continue to increase via smaller packaging and higher retail pricing and add to that the fact that the middle-class is being dismantled. We must remember that the upper-middle class and the wealthy have and do not feel the effects of Obamacareless, higher food prices, higher insurance rates etc; like those at Goldman Sach's...like the typical politician they are clueless to anyone's reality but themselves...that is why they can't figure it out and will not and really do not care.
taxes paid to fed gov continue at record highs-that's where the money goes.
If you can print money, why do you need taxes? (trick question)
Answer - the principle purpose of taxes is not to transfer money to the government. Its main purpose is CONTROL of the taxpayer. It serves as a weapon or a reward (to the degree that having less of something bad is a reward).
The secondary purpose is to convince and reassure government bond buyers that there is a steady stream of money to pay them off. Its all a confidence raising measure.
A tertiary purpose is as a control mechanism on the economy, tightening or stimulating as required to even out things - this is what the .gov used before the deployment of QE in its myriad forms. Its probably less important these days...
But inflation is only at 2%!
Spot on! What do I give a fuck about lower gas prices (suddenly $2.87/gal reg. where I live btw) if food, clothes, diapers, etc, still keeps going up? And maybe I'm wrong, but the gas prices seem awful similar to me whether at $60/barrel or $90!
W.T.F. Rapists
Clearly QE $$$ are finding their way into gasoline futures. It would take an incompetant newt about 15 minutes to figure this out. money for nothing and your chicks for free. . .
Money changers, lawyers, bankers, immoral religious leaders & politicians; the very people Jesus spoke of in direct condemnation. Was He right? He always is and always will be because He is God who knows everyone & everything there is to know.
---------------------------------------------------------------------------------------------------------------------
However; we all must come to grip with our own "sin condition" and if we do not, then we will face a similar fate as those named above...do not take Him lightly or you will regret it when you face Him and everyone will face Him for judgment; one for condemnation and the other for rewards.
"ANNNND
ITS GONE!
There are three things that get ignored when looking at gas demand -
First is the switch to part time work which means you only drive to work 3 or 4 days a week instead of 5. Add to this more home based workers.
Second is that when you are squeezed by rising prices everywhere else, even if government numbers say no to inflation, those gas savings go right to those other higher prices.
Third is that when you are squeezed you are less likely to take that extra off season vacation. So possibly, if the main summer vacations hold, they might be right in that gas consumption will rise - at least until September. After that it looks bleak again.
Not just people working from home, but also that they are now likely buying things online from home and having them delivered, so many less trips to the mall (hence the death knell to brick and mortar stores).
At least with Goldman's numbers you know there is no agenda attached - unlike the government numbers -- no wait...
My 6,200lb GVW automobile will be pissed!
I never understood how Hitler's mind worked RE: "We are winning!"....turns out he was a secret economist....Allies Invade France?.."We're winning!"......Russians knocking on the Reichstag Door?..."We're winning!.....B-17 raids daily and Berlin in rubble?..."Didn't like that city anyways.....now I made shovel-ready jobs!"...
Its all becomming clearer now....
Gasoline is a necessity for most people and most people do not have the disposable incomes to just buy gas and drive around more. Furthermore, we have not seen much in the way of lower airline fares or cost of plastics, as if the industries who use oil also know the low prices wont be here forever. In manipulated markets, the bankers and economists scratch their heads when traditional supply and demand or consumer behaviors no longer make sense to them.
Lighten up will you? It comes from Goldman Sucks what do you expect?
Why just a couple days ago Goldman said, " sell in May and stay away for a year." So now Goldman sez better upside in coming quarters. Does Anyone believe Anything Goldman say.
NO.
Let's all move to Oregon. A new tax!
That will fix things. Pay by the mile....Oh wait, that's what the gas tax is for. So let's pop another tax on top of the gas tax. brilliant.
"Oregon is about to embark on a first-in-the-nation program that aims to charge car owners not for the fuel they use, but for the miles they drive.
The program is meant to help the state raise more revenue to pay for road and bridge projects at a time when money generated from gasoline taxes are declining across the country, in part, because of greater fuel efficiency and the increasing popularity of fuel-efficient, hybrid and electric cars.
Starting July 1, up to 5,000 volunteers in Oregon can sign up to drive with devices that collect data on how much they have driven and where. The volunteers will agree to pay 1.5 cents for each mile traveled on public roads within Oregon, instead of the tax now added when filling up at the pump."
http://apnews.myway.com/article/20150520/us--oregon-charging_green_vehic...
Gas prices this morning in Pasadena are back almost to where they were when oil was $105 bbl. I paid about $2.85 about a month ago. I expect to pay well north of $4 next time. So much for savings passed down.
'
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Exactly.
Up in Toronto, the price of gas is now $1.15/litre.
They've got what they wanted: A new baseline for the bottom price, baked in at $50/barrel.
Now, when oil goes to 100 a barrel, you will effectively see a double of gas prices.
Unsustainable. I think. Could be wrong.
So maybe oil doesn't go up and they just make massive profits with $60/barrel?
Not good either way for the schlubs.
•?•
V-V
I noticed that too by me in JYC.
Economists are attempting to use dollars to measure an energy function. It is like using a rubber ruler to measure the length of your dick! It's any size you want it to be?
More like they are just making almost random assumptions. If A - lower gas prices = b consumer spends more money in other goods. Consumer spending is not economic growth. Spending comes by selling your goods and services to buy money. Consumers didn't spend the gas windfall because they're still broke and what a laughable assumption to assume that gas savings translates to more spending on other goods. It could simply mean that consumers are driving more on cheaper gas, and not necessarily taking advantage of cheaper gas to buy other things, they could be simply driving more. Hem.. Assumptions, assumptions.... To the contrary of the logic, one could easily assume that consumers took advantage of the low gas prices by buying more gas. They go to the pump more often.
They're always assuming the consumer spending binge is right around the corner.
Pretty laughable how financial experts created the gas price windfall consumer spending story. Which what it is essentially, a story. Reality different thing