THE TIPPING POINT? – AT 8:58 A.M. ET:  Related to Americans' grim assessment of their economic situation, reported in the post just below, is another assessment of close we may be to another recession.  From CNBC:

The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners.

Johnson looks at the percentage of income consumers are spending on gasoline and food as a way of gauging how consumers will fare when energy prices spike.

With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers.

"Energy is not quite as essential as food and water, but is a necessity in today's economy, and when gasoline costs more than bottled water—like now—then it takes a huge bite out of disposable spending," he said, in a research note.

Of the six US recessions since 1970, all but the "9-11 year 2001 recession" have been linked to—if not triggered by—energy prices that crossed the 6 percent of personal consumption expenditures, he said. (During the shallow 2001 recession, energy prices had risen to about 5 percent of spending, which is higher than the long-term 4 percent share.)

What may make matters worse this time around, is there has been a steep increase in food prices that occurred as well. In other recent recessions food costs were benign, at between 7.5 percent and 7.8 percent of spending.

COMMENT:  What is so striking, and I think Americans will get this, is the coldness coming from the White House.  High energy prices?  Why, maybe that's good for us.  They'll force us to be enlightened, like the crowd that flies to Aspen in private jets each year to attend conferences on major issues. 

This president, who mastered the dramatic moment during his campaign, seems incapable of doing so as president.  Thus the label "no drama Obama."  It's all very intellectual...but real people are hurting out there.  Long-term energy theories, often supplied by the global-warming crowd, just don't cut it.

April 22, 2011