KBB: Motorists Have Finite Money

kbb motorists have finite money

Like many organizations in these gas-conscious times, Kelley Blue Book (KBB) and the LA Times (LAT) are fascinated by the negative effects of high gas prices on consumer spending. So KBB did a study and the LAT reported it. The two giants in intellectual research found that, in short, $4 to $5 gas has forced people to spend less money on other shit [paraphrasing]. For example, people aren't going to the movies as much, now that they are spending more on gas. [Do you know what a movie theater looks like? Click over to the LA Times, and you can not only read "less money on movies" but see a picture of a real line at a real American movie theater.] Other things people aren't buying as much of: expensive coffee, vacations, clothing, restaurants, carwashes, DVDs and high-quality marijuana. OK, I added that last one. But how do we know that the rising costs of other consumables– most notably food– don't account for the cutbacks?

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  • Psarhjinian Psarhjinian on Jul 01, 2008

    Buy less expensive coffee? Over my decaying corpse...

  • on Jul 01, 2008

    I spend less on coffee only because both of the coffee places that I like went out of business; so, now I brew my own (I'm an engineer, we run on coffee). I have significantly cut back on driving and kept my fuel bill at about $25 per week versus the $20 per week I was paying four years ago. My food expenses have certainly gone up, but that could also be due to changes in the type of food I buy due to my increasing income over the past four years. My entertainment expenses have risen greatly as well.

  • SunnyvaleCA SunnyvaleCA on Jul 01, 2008

    There's also the reverse wealth effect of declining real estate. Losing $35k in home value in a single year can sure make you feel poor even if you gained equity for the previous 5 years. Some of the activities listed in the LAT article seem like frivolous luxuries (coffee, movies, dining out, baseball games). Perhaps the current amount of those activities is appropriate long-term and that the previous amount of those activities was excessive and based on spending beyond one's means. As for food, I can see an obvious rise in prices. However, I assume that most of the additional costs in food are due to energy costs not biofules diversion. The Biofuels Digest notes that the corn portion of a box of corn flakes is 2.2 cents, so even a 10x increase in corn prices would have little effect on a $4 box of cereal. http://www.biofuelsdigest.com/blog2/2007/08/27/cost-of-corn-in-a-box-of-corn-flakes-22-cents-why-are-corn-prices-being-blamed-for-food-price-increases/

  • Bomber991 Bomber991 on Jul 02, 2008

    I wonder what Kevin's explanation is for his pay increase to make gas cost less? Maybe he lives closer to work, maybe he drives a more fuel efficient car, maybe he graduated from college?

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