Will lower gas prices help economies to go up

Finally car owners have a reason to rejoice. The gas prices are coming down, indicating good economic growth and increased spending by the consumers as we start with the New Year 2013.

The U.S Department of labor, reported a drop in the latest Consumer Price Index by 0.3% between Oct. and Nov.

The drop in gasoline prices of 7.4% in Nov. was the largest in the last four years. There has been a drop in the price of retail fuel in the past few weeks and the overall cost of energy fell by 4.1% in Nov. As Monday arrives, the national average prices of gas will go down below $3.28 a gallon. This was the price of gas on Jan 1, 2012.

Hurricane Sandy had hampered the industrial output in October. But Nov. saw a rebound in the production of cars, equipment and other appliances. However the manufacturing trend in general was slow. The economy saw the prices of clothing and used items going down but rents, cars, travel became more expensive.

Citing inflation as a positive factor in the economy, Jim Baird of Plante Moran Financial Advisors, was of the view that inflation was in fact a good factor to help people deal with their as they get little relief in household expenditure and their low income growth.

Correlating interest rates to unemployment and inflation the Fed announced continued low interest rates as long as the unemployment rate was above 6.5% and inflation was going to be at 2.5% or lower. Chairman of the Federal Reserve, Ben Bernanke said that long-term inflation projections are being handled very well.

The lowering gas prices may be good for consumers but the Congress has to reach an agreement regarding its federal deficits and debt that have become chronic in nature. The Government needs to get its act together; otherwise a threat of yet another recession looms over the country. This is because of the Fed’s monetary policy that gives the economy slack and an opportunity to grow. The government needs to sort out fiscal issues before we see any real growth in the U.S economy.

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Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing. http://www.facebook.com/ben.rouss