The Big Risks

Mike Shedlock has probably come up with the most accurate forecast for the coming Employment Year. The one factor I do not see seems to me to be the most important factor of all. If Gasoline crosses $4 per gallon, then there will be a 70,000 Jobs per month loss. If diesel crosses the $4 per gallon limit, there will be a loss of 33,000 Jobs per month–my estimates. No one worries much until 5 gallons of Fuel costs a $20 bill. A long, hard Winter will also cost 9000 Jobs per month through April. I do not expect that Business sold enough in the Christmas Season to retain their full staff. Real Estate is going to lose more personnel under low Home sales, and Cars will likely fall off to the disquiet of significant labor. It does not look good!

Now We have to ask about the chances of fuels reaching the danger levels. Read this article! Are We going to make a new high in Oil Production? Can the current pricing of fuels be maintained in stability without a new high in Oil Production? The price of fuels would approach $6 per gallon if the price of Oil in contracts goes higher than $145 per barrel--my Guess. Rather than talk about the much higher-priced Oil, how about talking about $145/barrel Oil. We now have to talk about redirection of Consumer Demand to Fuels; every billion dollars of redirected Consumption will cost about 2000 additional Jobs per month. We find the future to be slightly rocky!

I will let my Readers ponder this thing. One now has to relate the discussion of stimulus to the whole business above. My estimates state that a $.55 per gallon rise above the current market price for fuel will cancel the entirety of the new stimulus. Here is gets much trickier: it is my estimates that a 3% rise in total State tax collections will also negate the stimulus efforts so far. A drag on Bank commercial and home loans extension consistent with the current restriction for over 8 more months will cancel the Bush Tax extensions. A combination of all factors at once will be equivalent to a 5-6% rise in overall Tax collections within this Country. To Be, or not to Be–I think We have been had! lgl