Click to enlarge.
Note the lag between the gasoline price shocks (peaks) and the shocks to employment (troughs). Also note the ruthless efficiency of the continuous 2004 to 2008 gasoline shock (the part within the blue circle) to help create all kinds of employment problems (and temporary stock market euphoria). Isn't easy money wonderful? Wow!
The next chart shows what the previous two years of gasoline price movements generally do to the following two years of employment.
Click to enlarge.
The good news is that gasoline is cheaper than it was 2 years ago. In theory, we should see at least some job creation begin to appear. That's assuming we can think up some new labor intensive industries on a planet with 6.8 billion people of course (while simultaneously automating service jobs and outsourcing our manufacturing base overseas).
The bad news is that the Federal Reserve seems determined to drive up the price of gasoline again. What if the "credible threat" of higher gasoline prices is all it takes to stop job creation?
Click to enlarge.
Note that this peak in the unemployment rate is not at all like the previous peaks. We're apparently attempting to construct a plateau.
November 21, 2002
Deflation: Making Sure "It" Doesn't Happen Here
By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so...
You can lead a horse to water. You can even credibly threaten him to drink. Can you actually make him drink though? The proverb says no. Horses apparently love unintended consequences.
Source Data:
EIA: Motor Gasoline Retail Prices, U.S. City Average
St. Louis Fed: Total Nonfarm Payrolls: All Employees
St. Louis Fed: Unemployment Rate
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