The economy is still cookin’ with gas

Well maybe a Hummer H2 isn’t a helpful analogy, but it got your attention. Many of us are walking around thinking: “Hurricane Katrina has turned out to be the largest US natural disaster that may cost us as much as $100B (4x Hurricane Andrew, the next largest), yet why does the economy still seem to be moving along, other than much higher prices at the pump?

Mortgage rates are still falling and the housing market continues to move upward. In fact, there is some speculation that the Fed will pause their regular increases in short term rates, albeit only temporarily.

Source: WSJ

The WSJ surmised today that it was due to three “Vital Shock Absorbers:” [Note: Paid Sub.]

  • Fuel Stockpiles – created to keep the erratic supply of fuel from harming the economy in the 1970’s
  • Temp Firms – allowed for placement of workers who lost their jobs from the storm
  • Fed’s Credibility – our faith in the decisions made by the Fed

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