An estimated 90 million of us will drive 50 miles or more during this holiday season, and recent years’ gnashings of teeth at the pump are being replaced with smiles. The price of gasoline is down 36 percent since April, to a national average of around $2.40 per gallon, with some cities reporting prices of below $2. That price, which includes paying for the crude oil and refining it into petrol, shipping costs and state and federal taxes, about equals only the tax component extracted from British motorists for every gallon of petrol, as they call it, that they buy. Costs of making the stuff are extra.
The story of oil and gasoline is only one part of the story of the advances -- some would say onward rush -- of the U.S. economy. In 2008 only 75 million Americans, some 15 million less than this year, took to the roads during the holiday season -- many were out of work or too strapped to bear the costs of travel. It might be too soon to revive Franklin Roosevelt’s 1936 campaign song, “Happy Days Are Here Again,” trumpeting the decline in the unemployment rate from 24.9 percent when he took office in 1933 to a mere 16.9 percent, but if things keep going as they are -- more on that next week -- we might be humming it at this time next year.
This is the year in which third quarter growth hit an annual rate of 5 percent, the highest in over ten years, following smart second quarter growth of 4.6 percent. Consumers spent more as did businesses. Orders for durable and nondurable goods, investment in plant and equipment and in intellectual property rose, as did exports. It’s hard to find a bad number in the newest batch of economic data, with the possible exception of housing.
· Auto sales are set to beat last year’s very good figure by about 6 percent, with big, gas-guzzling SUVs leading the way, some luxuriously outfitted and costing more than $100,000 dealers in Chevy Suburbans tell me;
· Share prices hit record levels, with the Dow Jones Industrial Average piercing the 18,000 level for the first time, prompting some New York Stock Exchange traders to show up on the floor wearing hats emblazoned “Dow 18,000”;
· The University of Michigan consumer sentiment index for December is at its highest level since January 2007;
· The unemployment rate fell from 7 percent at the end of last year to 5.8 percent and some 2.5 million new jobs were created;
· In October, manufacturing output passed its pre-recession peak, reached in January 2007, and the sector is now closer to operating at peak capacity than at any time in the past six years despite a global economic environment that is beset by woes from Europe to Russia to Asia to Latin America.
Two other milestones were passed on the road to a fuller recovery. The government’s bailout program, started by George W. Bush and continued by Barack Obama, was beloved of Wall Street and in boardrooms, and loathed on Main Street and around the proverbial “kitchen table” featured on so many political ads. It has now come to an end with the sale of stock from General Motors’ finance arm. That program, formally titled the Troubled Asset Relief Program (TARP), had thrown $426.4 billion of taxpayer money into a battle that saved Citicorp, Bank of America, General Motors, American International Group (AIG) and other companies, and, TARP fans contend, the entire U.S. economy from financial disaster. While, they add, turning a small profit of $15 billion ($25 billion in gains offsetting a $10 billion loss on GM shares) when for the government when it unloaded the shares it acquired during the bailouts -- a profit, that is, if you don’t count the cost of adding to the deficit to get cash to finance the buyouts. TARP left a permanent legacy of banks restored to sufficient health to pay the government some $100 billion in fines for various rule infractions, and of two anti-Wall Street, anti-cronyism populist movements, the Tea Party on the right, and the anti-Hillary Clinton Democratic faction now led by Massachusetts senator Elizabeth Warren, on the left. TARP is no more, these factions remain as thorns in the sides of establishment parties.