In December 2014, as gas prices had plunged over 20% YoY, Janet Yellen proclaimed "from the standpoint of the U.S... the decline we've seen in oil prices is likely to be, on net, a positive," and that narrative of slumping gas prices being "unequivocally good" for Americans was spewed everywhere across linear-thinking mainstream media. So we wonder, with gas prices up 22% year-over, the fastest spike since 2011, is that "unequivocally bad" for America?
Remember when Janet Yellen, and all the tenured economists in her circles said that plunging gas prices are great for the consumer?
The dramatic plunge in oil prices might be spooking some investors, but Janet Yellen isn't worried at all.
The Federal Reserve chief believes oil tumbling is like a tax cut for American consumers.
"From the standpoint of the U.S. and U.S. outlook, the decline we've seen in oil prices is likely to be, on net, a positive," said Yellen at a press conference on Wednesday.
"It's good for families, for households. It's putting more money in their pockets," she said.
"On balance, I would see these developments as a positive," she said.
Well, as we noted last week, as GasBuddy warned of "sticker-shock" - as motorists will shell out $52 billion more over the course of the year compared to 2016, we are about to find out just how bad for the consumer rising prices will be.
Retail gas prices surged again last week, with the average price for regular gasoline at U.S. pumps rising 11.97c to $2.3777/gal, according to Lundberg Survey.
This is a 20.6% year-over-year surge - the biggest since October 2011.
By Janet Yellen's logic, the 20-plus percent surge in gas prices means "less money in Americans' pockets" and as a final reminder, this is what happened to the US Macro-economic data, the last time gas prices surged at the current pace...
Trilby Lundberg, president of Lundberg Survey, explains there are two primary causes to rise in average retail price:
- "Retail gasoline has been catching up to earlier crude price rises”, and
- "More states added gasoline tax hikes and federal regulations reduced amount of sulfur in gasoline by two- thirds, both effective Jan. 1"
We wonder what Janet Yellen will have to say about this 'drag' on the consumer... or is it now an indication of the 'confidence' in the US economy?