Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Thursday, April 21, 2005

This Is News?

"There are increasing signs that US motorists are changing their driving habits in the face of record prices at the fuel pumps."

Stop the presses! Demand curves are not vertical after all!
People do respond to incentives.

[h/t to BrianF for the link]

And here is some related non-news news:
Economists Uncertain Of Energy Costs' Impact

Well, yes.

Actually, the article itself is pretty decent -- the headline, however, does not do justice to the article.

Although economists agree that surging energy costs in March and early April dampened economic growth, they say it is unclear whether the U.S. economy has cooled only briefly or has begun a more serious slump.

The very fact that oil and gas prices have swung so much over the past year creates "added uncertainty" for businesses and consumers, who may then hunker down more than expected, said David Rosenberg, chief North American economist for Merrill Lynch & Co.

...Energy prices are complicating the Fed's job of setting interest rates to promote growth while keeping inflation low.

After their last policymaking meeting March 22, Fed officials issued a statement noting rising inflation pressures and a growing ability of businesses to raise prices. Some analysts took that as a warning that the Fed might raise interest rates more aggressively in coming months.

But other observers said that energy prices, by slowing growth, reduce pressure on the Fed to move rates up faster. That should enable the Fed to continue to raise its benchmark rate at a gradual, or "measured," pace, they said.

[link via The Knowledge Problem (be sure to read the comments there as well)]

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