There were a slew of economic numbers out today that, when considered alongside Federal Reserve Chairman Alan Greenspan's big speech Thursday night, paint a picture of an economy just managing to limp along.
Greenspan, delivering his first major forecast on the economy since February, was unusually direct. "The period of sub-par economic growth is not yet over," the Fed chief said in a dinner speech to the Economic Club of New York.
Today's report on gross domestic product confirmed the economy's anemic condition. First-quarter growth slipped to 1.3 percent, well below what many economists regard as the economy's potential and less than the 2 percent growth that had been forecast.
Consumers have kept the economy afloat, and now their are signs even they are cutting back. Reports today show home sales are down, as are sales of some big-ticket items.
High Gas Prices Force Belt-Tightening Elsewhere
Gas prices are a particular worry as Americans head into the summer. "I think the run-up has been unprecedented," said Tom Kloza of the Oil Price Information Service, which monitors petroleum news and prices. "We've seen run-ups in the last five springs, but this one has really been spectacular. We're probably up in the wholesale markets anywhere from 40 cents to 60 cents since the first day of spring."
Kloza said he thinks pump prices should stabilize over the rest of the summer, but prices may not head any lower than their current nationwide average of $1.71 for a gallon of regular.
"Two months ago it was $25 [to fill the tank], now it's $32," said a motorist at a Los Angeles service station today.
Calculate Your Gas Costs
The American Automobile Association says high gasoline prices won't stop vacationers from hitting the road in record numbers this summer. But they could lead to cutbacks elsewhere.
"People are still planning to travel," said Norma Cooper of AAA. "They just may not travel as many times or as far."
A Few Fewer Souvenirs
Recreational vehicle owners, who get about 7 miles per gallon, were already packing an RV park in Foxboro, Mass., today, ahead of the holiday weekend. Among them were Bob and Karen Palmer, who are also planning a longer trip — to the Outer Banks in North Carolina — in July.
"We've talked to the children about the high price of gas and told them it's going to be a little more expensive to get where we're going, so they might not get as many souvenirs," Karen Palmer said.
Kloza said prices would have to increase significantly before people would start driving less. "Everything that we're seeing indicates that May [consumption] broke all the records for previous Mays, and that was despite prices that were probably 20 or 30 cents higher than they were in previous years," he said.
Greenspan says high gasoline prices act like a tax on consumers' incomes and spending. And, as he put in in his dinner speech, that's "hardly welcome" in today's difficult economy.