Gasoline prices are up more than 47 percent over the last 10 months. This incredible rise in gasoline prices often happens before a recession.
In the video below, I make three predictions regarding gasoline prices and where the U.S. economy is headed unless something is done to bring down gasoline prices.
The key level to watch on the GASO chart is $2.35. In 2007, the S&P 500 began to falter when the GASO chart broke above $2.35.
Folks, look at the price of gas. Sound the bear siren! Folks, GASO. It’s been a few years since I’ve followed this closely but long time listeners know that I track GASO as the way, it’s basically like the futures of the gasoline prices in your area, and it takes, at least in my area, it takes about 2 to 3 weeks for the price surge or price drops to show up in the per gallon of gas in my area. Your area may be different, I don’t know. But that’s kind of, I mean you can just, people will be in awe of you because you’ll be able to predict you know the up and down and swings of gas prices by looking at this chart, but folks, look at this chart! This is incredible!
Over the last 10 months gasoline unleaded is up 47.5% in just the last 10 months, 47.5%! That’s horrible folks. Forget about the Trump tax cuts as stimulating things. The rising price of gas just took all of that from us. The tax cuts were a joke for the middle class anyways. I’ve talked about this in previous Saturday shows. The average middle-class worker got chump change. The rising price of gasoline has easily taken away any kind of benefits from tax cuts for the average consumer. In fact, the rising price of gasoline is just. oh folks, this is really bad. It’s happening at a time when the Feds been hiking rates and we’ve got these absurd credit card rates.
I mean what are these idiots thinking? Don’t they ever learn from previous cycles?
They’re charging 26.9% on a Care Credit card that I recently had to max out for my daughter’s braces and for my own eyes, my own eye vision. Apparently, my Blue Shield healthcare plan doesn’t cover eyes. So I had to max out my Care Credit. Care Credit is supposed to be a cheaper credit card only used for healthcare purposes, 26.9% they’re charging. I mean credit cards are insane!
If, if you have a Visa and MasterCard debt, which was most of us do, again 26, 27% on those credit cards! How are people supposed to come up with the extra money for a 47.5% increase in the price of gas?
Consumer debt is expected to hit a record high of 4 trillion by the end of this year. Nobody has any spare cash laying around to spend on gas.
More than 50% of all consumers in the US are struggling to cover rent and food, oh yeah, rent’s been going up to! Forget about any benefits from President Trump’s tax cuts for the consumer. And now that consumers are having to spend more on gas, 47.5% increase in gas, now the consumers are going to the pump and in my area, the gas price is about $3.45, $3.50 per gallon. Okay that’s in my area. Some areas of the US the, the price of gasoline just crossed above $5 dollars per gallon, but the average across this country is $3 dollars per gallon for gas.
Now that consumers are having to spend so much more money at the pump, what do you think they’re going to cut back on? Discretionary spending, which means retail, it means movies, it means restaurants. Anything across the entertainment sector, Disneyland, better watch out for Disney stock. You guys know I sold out of Disney earlier in the week. That stock’s been like an ATM, but man, you gotta be careful trading it. You gotta get out of Disney quickly, it’s too much tied to consumer discretionary spending, and look at what’s happening to the price of gasoline, credit cards, rent.
Back in 2008, when we had the big market crash, the price of gas hit $4.11 a gallon. We’re at $3 now so we have a ways to go, but folks, I challenge that back in 2008 the average consumer had a lot more money than they have right now because of home-equity lines. Everybody was flipping homes and it was insane. People were being qualified for houses and there was robo-loans and everybody was tapping their home equity lines, not as many people can do that today. Therefore, I don’t think the price of gas has to get to $4.11 a gallon nationwide for us to possibly see a market crash or even the next recession. Meanwhile, Trump wants to wage wars across the Middle East, imposing the “strongest sanctions in history on Iran”. What do you think that’s going to do to the price of oil and hence the price of gas? Oh, and then Trump puts more sanctions on Venezuela because the people there reelected president Maduro.
I mean Trump’s just, he’s just handing out sanctions left and right. For some reason it’s starting to look like President Trump thinks that the more sanctions he puts on other countries, the more it improves the US status and makes the US look strong and makes the US look tough, but really Trump putting these sanctions on all these countries, especially these oil producing countries, are really weakening the US, that is weakening the US economy. It’s pushing up gas prices and the more people pay on gas, the less they’re going to pay on consumer discretionary items, entertainment sectors, restaurant, and retail. Folks, this does not look good. If you’re actively trading in the stock market, just remember, keep one eye on the exit.