Gas Crisis And Consumer Spending

Research conducted by market analysts (I’m alluding to people who have been acclaimed for having good foresight) in early 2008 on consumer spending habits does not paint the true picture of the current situation given the oil and food price trends. Commodity prices are increasing by the day. Rice is a staple food in my culture and I have seen the 20-pound rice price quadruple in the last three months: It follows the simple supply-demand curve, they say. That’s a no-brainer. Gas prices are driving me nuts. When I and my husband landed in the U.S back in mid 2001, gas was selling for $1.09 a gallon. Now it is selling for $4. See for yourself how much it has increased. I panicked when I moved to LA in 2003. The gas was selling for over 2 dollars in Newport, CA when the gas was priced at 1.30 in Tampa. Now, the differentials between high and low profile cities have diminished. It is trading at a ridiculously almost-flat high price everywhere. I don’t have a good understanding of who really makes profit in the whole oil supply chain.

Even though the economy started to soften in 2007, I did not worry too much about it until the newspapers and other journals started to intimidate individuals and companies alike. I wanted to get a sense for how people are reacting to credit crunch and the economic downturn. I added a few companies, like Starbucks to my watch list to see how these fears are affecting every company’s bottom-line. Guess what, Starbucks is not alone. This gourmet coffee pioneer is also caught in a financial turmoil. They posted record low revenue growth this quarter, to be precise, the lowest year-over-year to date. People feel that Starbucks is a luxury and that it is something you can yank out every month. This came naturally to me. I read news everyday and so worries about economy and future cross my mind and I just don’t indulge in things that are not a true necessity. We can observe