More money in the hands of the consumer increases demand...

January Auto Sales Surge on More Consumer Cash | Fox Business

The auto industry is in the midst of a strong run of monthly sales improvements as U.S. consumers, armed with more cash because of lower gasoline prices, are more confident about the economic outlook.

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It's not that typical that the worker/consumer class finds themselves with a few more bucks in their pockets, but this is what happens when they do. It's called economic growth.

It's all about the "demand participants" not the "job creators"

imagep said:

January Auto Sales Surge on More Consumer Cash | Fox Business



It's not that typical that the worker/consumer class finds themselves with a few more bucks in their pockets, but this is what happens when they do. It's called economic growth.

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I'm sure this makes the auto makers/workers happy, but considering the price of cars these days, a few bucks at the pump isn't going to make a car any more affordable. What it likely will do is make the gas guzzlers more attractive. But as prices at the pump increase, as they have the past couple of days, those decisions to buy a car will squeeze some people the wrong way. Wasn't long ago someone posted a thread about the record number of auto loan defaults in the US. Unfortunately, many people in our "me want it now" society don't think past the day they're living in.

SlevinKelevra said:

It's all about the "demand participants" not the "job creators"

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It is all about people who have been eeking along in their clunkers since the recession getting their rapid refunds would be my guess.

CanadaJohn said:

I'm sure this makes the auto makers/workers happy, but considering the price of cars these days, a few bucks at the pump isn't going to make a car any more affordable. What it likely will do is make the gas guzzlers more attractive. But as prices at the pump increase, as they have the past couple of days, those decisions to buy a car will squeeze some people the wrong way. Wasn't long ago someone posted a thread about the record number of auto loan defaults in the US. Unfortunately, many people in our "me want it now" society don't think past the day they're living in.

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I imagine when gas prices really do start to go up again there are going to be a lot of very unhappy people who recently bought a hummer, large truck, or similar gas guzzling vehicle.

imagep said:

January Auto Sales Surge on More Consumer Cash | Fox Business



It's not that typical that the worker/consumer class finds themselves with a few more bucks in their pockets, but this is what happens when they do. It's called economic growth.

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along with a very unhealthy dose of "I got a $10 per week raise let's go buy a car".....

Demand is the only thing that has ever or will ever grow an economy. If nobody can afford what you're selling, no amount of tax cuts for rich people are going to make a nation prosperous.

Paschendale said:

Demand is the only thing that has ever or will ever grow an economy. If nobody can afford what you're selling, no amount of tax cuts for rich people are going to make a nation prosperous.

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good thing tax cuts don't just affect the wealthy but the poor as well.

Carjosse said:

I imagine when gas prices really do start to go up again there are going to be a lot of very unhappy people who recently bought a hummer, large truck, or similar gas guzzling vehicle.

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LOL There are no more new Hummers and fleet MPG averages have increased. The odds are their new car or truck will get much better mileage than their trade-in. That is why US gasoline consumption is still near 2000 levels.

ludin said:

good thing tax cuts don't just affect the wealthy but the poor as well.

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Howe can tax cuts effect the poor when they don't owe ANY income tax to begin with?

iguanaman said:

Howe can tax cuts effect the poor when they don't owe ANY income tax to begin with?

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Now you sound like Romney with his 47% comment.

iguanaman said:

Howe can tax cuts effect the poor when they don't owe ANY income tax to begin with?

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tax withholding tables are based on the current tax codes. so if rates are lower then they get a bit more in their pay check every week.
the whole point of adjusting tax code is so that people have more money week to week.

So if you cut the current 10% rate to 5%. they will have more in their check at the end of the week based on new withholding tables.

in fact if you lower every rate by 5% or even the first 3 or 4 brackets by 5% it benefits people.

Declan said:

It is all about people who have been eeking along in their clunkers since the recession getting their rapid refunds would be my guess.

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Every January has that, yet it was this January that saw a spike in sales.

ludin said:

good thing tax cuts don't just affect the wealthy but the poor as well.

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That depends on the tax cut.

Carjosse said:

I imagine when gas prices really do start to go up again there are going to be a lot of very unhappy people who recently bought a hummer, large truck, or similar gas guzzling vehicle.

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The price of a barrel of oil has gone up about $5 in the last couple of days. Once it gains momentum, it won't be long before it breaks $100 again. I hate to see it, because I like cheaper gas as much as anyone else, but it's inevitable.

CanadaJohn said:

The price of a barrel of oil has gone up about $5 in the last couple of days. Once it gains momentum, it won't be long before it breaks $100 again. I hate to see it, because I like cheaper gas as much as anyone else, but it's inevitable.

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What's odd is that it was only last week that I was reading that the inventory of oil was still increasing.

The CNN article I read today attributed the rise in the price of oil to a refinery strike. I can't see how that would effect the price of oil though. Gas, yes, certainly, but not oil, a refinery strike means a temporary drop in demand for oil, not more demand.

imagep said:

What's odd is that it was only last week that I was reading that the inventory of oil was still increasing.

The CNN article I read today attributed the rise in the price of oil to a refinery strike. I can't see how that would effect the price of oil though. Gas, yes, certainly, but not oil, a refinery strike means a temporary drop in demand for oil, not more demand.

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Some of the overly high price of oil in the past couple of years has been driven by market manipulation, in my view, even though there have been attempts to dampen that through regulation and it wouldn't surprise me if the large drop in price was also the effect of that manipulation. It's likely to find at least a midpoint balance in the next month or so of around $100 unless something serious blows up in the Middle East and then all bets are off.

imagep said:

Every January has that, yet it was this January that saw a spike in sales.

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Not really a "spike". Except for Ford, which is just rolling out a new truck, sales were only slightly above expectations compared to January of last year when the polar vortex pretty much dinked the economy hard for the month across the board, except for energy costs. It is nice to see improvement, but I wouldn't be breaking out the champagne just yet.

Demand does not cause economic growth. It directs economic growth. An increase in overall demand is only possibly by a preceding increase in the supply of goods and services--in other words, economic growth is what allows society as a whole to demand more than before.

ludin said:

tax withholding tables are based on the current tax codes. so if rates are lower then they get a bit more in their pay check every week.
the whole point of adjusting tax code is so that people have more money week to week.

So if you cut the current 10% rate to 5%. they will have more in their check at the end of the week based on new withholding tables.

in fact if you lower every rate by 5% or even the first 3 or 4 brackets by 5% it benefits people.

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Doing that alone, however, increases the deficit.

imagep said:

What's odd is that it was only last week that I was reading that the inventory of oil was still increasing.

The CNN article I read today attributed the rise in the price of oil to a refinery strike. I can't see how that would effect the price of oil though. Gas, yes, certainly, but not oil, a refinery strike means a temporary drop in demand for oil, not more demand.

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The price of oil is determined by how well the company can SELL to our government their need to increase prices.


IE, the only thing that keeps gas from being, say, 5 bucks a gallon, REGARDLESS of supply, or more, is the fact that our government has a large say on the matter, due to the amount of subsidization they offer the industry. Don't play ball, lose the subsidies. That sorta thing. They do this because they NEED gas to be bought by ALL, kept CHEEP, in order to be able to tax the **** OUT OF IT.

A strike provides the PERFECT cover to convense some comity that prices need to creep up a hair. Supply has almost nothing to do with the price of gasoline. Because demand for it will not change, regardless of supply. We have a ton of it, we still need a minimal amount. We have almost none of it, we still need a minimal amount. Oil companies could get away with charging 10 bucks a gallon, just fine.


Are you going to stop driving as a result of gas being 10 bucks a gallon? Gonna ditch your house, move out into the woods?

Lakryte said:

Demand does not cause economic growth. It directs economic growth. An increase in overall demand is only possibly by a preceding increase in the supply of goods and services--in other words, economic growth is what allows society as a whole to demand more than before.

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So what you are saying is, "If we make it, they will come...."




You're wrong, mate. Just because we make a bunch of ****, doesn't magically put dollars into pockets to buy that ****. FACT.

Paschendale said:

Demand is the only thing that has ever or will ever grow an economy. If nobody can afford what you're selling, no amount of tax cuts for rich people are going to make a nation prosperous.

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yep.

.....

Lakryte said:

Demand does not cause economic growth. It directs economic growth. An increase in overall demand is only possibly by a preceding increase in the supply of goods and services--in other words, economic growth is what allows society as a whole to demand more than before.

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I realize that a lot of people think that, but in the real world, it's not the way things work.

Are you claiming that the only reason more cars were sold in Jan of 2015 is that there was a spike in the production of cars?

In my world, a customer comes in and orders something, and I produce it. Same goes for many industries. The toaster oven producer doesn't just randomly produce as many toasters as possible, expecting that if they increase production, they will magically see an increase in sales. It doesn't work like that. The toaster oven company produces all of the toaster ovens that it's customers (the retailers) order. It gauges it's production based on the number of orders that it gets.

Likewise, McDonalds only produces as many hamburgers as are ordered, and the company that makes those frozen meatlike patties, only produces as many as McDonalds orders.

The barber only cuts as many heads as walks into it's shop. The paperclip company only produces as many paperclips as it's retailers order. The computer manufacturer only makes as many computers as it's retailers order.

In the case of trucks, it's being assumed that the reason that the reason that cars sales has increased, is because consumers have a few more bucks in their pockets, and can afford to purchase more cars. Now most likely the inventory of cars declined a tad in January, because this wasn't really expected, so now car producers who are low on inventory will slightly increase production, until their inventory is back at what they believe to be the optimum (profit maximizing) level. Car sales increased, and an increase in production will now likely follow.

Anyone who is involved with the scheduling of production levels would understand this. Businesses don't operate based upon your theories, they operate based upon really life demand and the need to maximize profits. Having warehouses filled full of production which is beyond demand, rarely if ever maximizes profit.

KevinKohler said:

The price of oil is determined by how well the company can SELL to our government their need to increase prices.


IE, the only thing that keeps gas from being, say, 5 bucks a gallon, REGARDLESS of supply, or more, is the fact that our government has a large say on the matter, due to the amount of subsidization they offer the industry. Don't play ball, lose the subsidies. That sorta thing. They do this because they NEED gas to be bought by ALL, kept CHEEP, in order to be able to tax the **** OUT OF IT.

A strike provides the PERFECT cover to convense some comity that prices need to creep up a hair. Supply has almost nothing to do with the price of gasoline. Because demand for it will not change, regardless of supply. We have a ton of it, we still need a minimal amount. We have almost none of it, we still need a minimal amount. Oil companies could get away with charging 10 bucks a gallon, just fine.


Are you going to stop driving as a result of gas being 10 bucks a gallon? Gonna ditch your house, move out into the woods?

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So you really believe that our government sets oil and gas prices (beyond any effect that taxes/tax incentives have)?