A headline in today's news says "Dow plunges 350 on weak service sector." Now, the service sector (restaurants, retailers, banks) is two thirds of our economy, keep in mind. We lost jobs for the first time in years, and now they are looking for the collapse of collaterized bonds and securities (mortgages). All of this "drives a nail into the coffin from investors' minds that we're in a recession."
Yet, yesterday's news included an article that said: "Buoyed by soaring crude oil prices, Exxon Mobil announced yesterday that it set new records for U.S. quarterly and annual corporate profits in 2007, and Chevron, the nation's second-largest oil company, also reported big gains in earnings." As if that isn't enough to make your blood boil, the same article says, "Even after paying taxes and expenses, Exxon earned $20.97 a barrel in profits on its production... and the company bought back 365 million of its own shares." I guess it doesn't want to share the wealth any more than it has to. Exxon also produces it's own crude - 2.5 million barrels a day and is bemoaning a 1% drop in production because it's operation in Venezuela was nationalized.
I have no idea how OPEC works, or what the price per barrel of crude is based on. But, am I erroneous in thinking that the cost per gallon at the pump is directly tied in with major increases across the board in consumer goods? Doesn't consumer spending comprise around 74% of the nation's economy?
Let me put this in real life perspective here. It now costs me $20.00 for gas what used to cost $7.00. It now costs $3.98 for a gallon of milk when it used to cost $1.98. My wages have stayed pretty much the same for as long as I can remember, yet it is costing me three times as much to heat my house in the winter, buy food and put gas in my vehicle to get back and forth to work. There is no discretionary spending in my budget. The last time I bought new clothing was over two years ago, I rarely go out to eat, and the last time I went to the movies, it was on someone else's dime. Feed for my dogs, cats and horse come out of my grocery money, and since those prices have also gone up exponentially, my diet consists of Ramen noodles and other healthy foods like that. To sum it up, 74% of my budget does not fall into service sector spending.
Correct me if I'm wrong here, but didn't all this worry over recession start with major hikes in gas prices? I've always felt that Big Business was short sighted, but now it is blatantly, overtly biting the hand that feeds it, with absolutely no remorse whatsoever. The rich are getting richer, no matter the state of the economy for the rest of us.
By the way, we are in a recession. Am I more worried? No; I'm already quite used to my stomach growling.
Thanks for reading!