Breitbart Business Digest: American Consumers Powered Through the Oil Shock
Breitbart Business Digest: American Consumers Powered Through the Oil Shock
What if They Held an Oil Crisis and No One Showed Up?
The most remarkable thing about the U.S. economy right now is its resilience.
When the price of oil started climbing after Iran succeeded in halting traffic through the Strait of Hormuz, there was good reason to worry that soaring gasoline prices would become a serious economic drag. Far more than creating risk of persistent inflation, higher gasoline prices risked siphoning demand from other parts of the economy. In the worst-case scenario, falling sales would trigger layoffs and raise unemployment, setting off a negative economic spiral.
It did not help that we appeared to be entering the spring with a somewhat sluggish economy, at least on paper. GDP grew at a measly 0.5 percent annualized rate in the fourth quarter of last year, although that was partly because of the prolonged government shutdown. And prior to today, first-quarter GDP growth also looked weak, estimated at 1.6 percent in the second revision released last month.
The data, however, suggest that the American economy powered through the Iran oil shock. Nominal spending climbed 0.7 percent in May after rising 0.4 percent in April. Real spending, which had been flat in April, rose 0.3 percent. Americans adjusted to higher gasoline prices not by pulling back spending elsewhere but by increasing their purchases.
Household Spending Withstood Higher Gasoline Prices
This is even clearer when we look more closely at the inflation-adjusted May personal expenditures data released Thursday. Americans spent more in real terms on cars and trucks, furniture and appliances, and durable recreational goods. We bought more groceries and clothing. Recreational spending climbed. Excluding food, energy, and housing, consumer outlays rose 0.4 percent for the month.
The retail sales figures released a week ago told the same story. Overall sales—which are adjusted for seasonality but not inflation—rose 0.9 percent. Excluding gas stations, sales rose 0.7 percent. And the gains were widespread, including significant increases in sales at auto dealers, health and personal care stores, furniture stores, and online retailers.
There were some signs of strain. Restaurant and bar sales were weak in May. The retail sales data showed a 0.1 percent nominal decline. The personal consumption expenditures figures indicated a 0.3 percent decline in inflation-adjusted spending on food services and accommodations. Transportation services spending—the category that includes airfares—also fell by 0.3 percent (and has declined now for three straight months). Perhaps surprisingly, real spending on gasoline and other energy goods declined 2.4 percent in May, which means households reacted to higher prices by shifting demand away from gas.
A Strong Labor Market Explains the Resilience
Why have households withstood the oil shock so well? For one thing, it appears that many Americans treated the shock as likely to be temporary. When a change in the economy is seen as likely to be transitory, households often do not adjust much in response because it doesn’t alter their long-term expectations for income and prices. Perhaps because the rise in gas prices was so obviously triggered by the war with Iran and that war was not seen as a longterm undertaking, Americans looked past it.
The tax cuts in last year’s One Big Beautiful Bill no doubt also contributed to household strength. This left Americans with bigger refund checks than expected right around the time the higher gasoline bills were hitting. And it meant a smaller share of income of overtime workers, tipped workers, and retirees was being taken by the government.
Finally, there is the strength of the labor market. The economy has added an average of 188,000 jobs per month over the last three months. Layoffs, as measured by jobless claims, have been extraordinarily low. This is contributing to strong income growth. Aggregate income rose 0.7 percent in nominal terms in May and 0.3 percent after adjusting for inflation. Wages and salaries rose 0.4 percent in May in nominal terms, giving working men and women more spending power to compensate for the higher prices of gasoline.
With gasoline prices now falling rapidly—the national average was around $3.92 a gallon on Thursday—those income gains and that level of job security will become a powerful driver of growth in the months ahead. Inflation is likely going to decline rapidly and may even go negative on a month-to-month basis, raising the real spending power of households. That may even be enough to raise those consumer sentiment numbers out of the weird depression they’ve been in for several months.
An important test of economic policy is the ability of an economy to withstand a negative shock. This spring, the U.S. economy passed the test with honors.
Badenoch blasts 'moaning' female Labour MPs over Burnham jobs 'quota'
Kemi Badenoch has told Labour women to earn a job in Andy Burnham's Cabinet instead of demanding they are handed jobs because of their gender.
The Tory leader lashed out today amid reports that female MPs are demanding the de-facto new prime minister introduce a 50:50 gender split 'quota' in his government.
Amid reports that former foreign secretary David Miliband is being lined up to return to the role, possibly with his brother Ed as Chancellor, one female minister also complained that Burnham could not have 'more Milibands than women' in the top posts.
But in a scathing article in the Times today Mrs Badenoch told them to 'stop moaning' and get chosen on merit instead of retreating into 'more of the failed identity politics that is holding back our country'.
'There are many, many reasons why you shouldn't have any Milibands in the cabinet,' she said.
'But complaining that the boys haven't given them the right jobs or that the boys are taking all the jobs, just shows that Labour's women still don't get it.'
The idea of quotas was also attacked by Baroness Jacqui Smith, Labour's Skills Minister.
Asked by Times Radio if Mr Burnham should reserve jobs for women, she said: 'No, I think what Andy Burnham should be doing is building the very best team around him to change this country.'
A letter written by the Women's Parliamentary Labour Party has called on Mr Burnham to ensure a 50:50 split between men and women in government jobs
Amid reports that former foreign secretary David Miliband (above, right, in 2010) is being lined up to return to the role, possibly with his brother Ed as Chancellor, one female minister complained that Burnham could not have 'more Milibands than women' in the top posts
But Mrs Badenoch told them to pipe down and get chosen on merit instead of retreating into 'more of the failed identity politics that is holding back our country'
A letter written by the Women's Parliamentary Labour Party and seen by the BBC has called on Mr Burnham to ensure a 50:50 split between men and women in government jobs after he succeeds Sir Keir Starmer.
'We are asking you to demonstrate this change from day one and address the toxicity and misogyny within our own party and government,' it said.
Labour has never had a female leader, while the Conservatives have had three, and Mrs Badenoch urged the government to follow its meritocratic example.
'If you run a meritocracy, then you do not have to worry about jobs for the boys,' she wrote.
'Every woman who is a Conservative MP, every woman who has ever won the leadership, has had to fight to get where she is.
'By contrast, Labour women are demanding guarantees from Burnham. But the truth is he doesn't have to give any guarantees.
'If none of Labour's women are prepared to get their hands dirty and challenge him for the leadership, their demands are toothless.'
'In fact, it's quite revealing that the women's parliamentary Labour Party has written to Burnham asking him to commit himself to at least 50 per cent female ministers.
'This has nothing to do with meritocracy. It is yet more of the failed identity politics that is holding back our country.'
Venezuela Fury and Noah Price subsidising their life by livestreaming
Venezuela Fury and her husband Noah Price look to be making their own way in the world by raking it in from their lucrative social media accounts.
The influencer daughter of Tyson and Paris Fury, 16, has become an internet sensation after tying the knot with her husband Noah, 19, earlier this year.
Since getting married and moving in together the couple have been earning thousands of pounds a month, livestreaming their life as newlyweds in their static caravan in the East Riding of Yorkshire.
And fans can't get enough of their regular life updates on TikTok and Kick, which have proved to be very profitable for the pair.
They look to be supporting themselves after Noah denied that he was given £5million by Venezuela's family as a wedding gift.
Despite his wife's huge family wealth, an estimated combined £160 million, Noah recently told his Kick followers that he 'pays for everything' for the couple.
Making light of the claims about Venezuela's millionaire financial status, Noah said: 'I actually pay for everything unfortunately. You'd expect the millionaire to pay for it wouldn't you.'
Venezuela Fury and Noah Price are earning thousands livestreaming their caravan life - after her new groom insisted he pays all the bills and denied he had £5m handout from her dad
The influencer daughter of Tyson and Paris Fury , 16, has become an internet sensation after tying the knot with her husband Noah, 19, earlier this year
Venezuela then asked their fans: 'Do you think I am a millionaire?'
Noah joked: 'She isn't a secret millionaire guys', before she broke into song and sang: 'But I live like a millionaire!'
But it seems according to estimated calculations from their social media work, Noah and Venezuela can more than afford to support themselves.
Noah has been livestreaming on platforms such as Kick and TikTok, where viewers can send paid gifts or donations.
He was previously encouraging viewers to send gifts on his honeymoon during livestreams, suggesting this is one revenue stream.
Both Noah and Venezuela have built substantial followings on Instagram and TikTok. They can potentially earn money through sponsored posts, brand collaborations, affiliate links and creator payouts.
Kick allows its creators to take home 95 per cent of the £4.99 subscription cost that fans pay.
Streamers keep 100 per cent of direct tips and donations, minus minor standard payment processing fees.
It is unclear how many subscribers Noah currently has because this information is hidden, but he does have 7,200 followers which is publicly viewable.
An industry insider has suggested Noah is making around £400 per video on TikTok, while Venezuela is likely to make £2,000 due to her following count of 1.3 million.
An industry insider has suggested Noah is making around £400 per video on TikTok, while Venezuela is likely to make £2,000 due to her following count of 1.3 million
In one video on their honeymoon, Noah asked his followers if they'd give them some more gifts now that they were married.
In a TikTok live viewed by 20,000 he said: 'Keep liking our videos people, keep sending gifts.'
After saying thank you to several of his followers he joked they should stick around on the livestream and 'watch Venezuela punch me in the mouth'.
The other half of the honeymooning couple said: 'I am, honestly!'
Noah previously confirmed that the pair don't share their finances after they were asked whether they have a shared bank account.
'She earns her money, I earn mine,' said Noah, as Venezuela joked: 'Yeah, what you gonna do about it.'
Noah went on to debunk the rumour that Tyson gave him £5million when he tied the knot with his daughter as he insisted: 'No Tyson did not give me £5million'.
Meanwhile Venezuela is being eyed up by executives for a fly on the wall TV series.
Noah went on to debunk the rumour that Tyson gave him £5million when he tied the knot with his daughter as he insisted: 'No Tyson did not give me £5million'
Boasting 1.3 million TikTok followers, Venezuela is already entertaining fans with her honest musings and candid moments, from cooking to kitting out her and Noah's static caravan home.
And following the success of the Netflix series At Home With The Furys, it is no wonder bosses are wanting to draw on the Fury popularity.
A TV insider said: 'The couple are not A-list celebrities but everyone has become obsessed with their love story.
'People are genuinely intrigued by them. Whether it’s the fact they have married so young, Venezuela’s famous family or their gypsy lifestyle, they have the ‘X factor'.
'Several TV executives think a proper fly-on-the-wall series following their lives as newlyweds in the gypsy community would be fascinating,' they told The Sun.
It is thought Netflix would be likely to produce the series due to their already established relationship with the Furys.
Venezuela's representatives told The Daily Mail: 'We have many offers on the table regarding Venezuela which we are discussing.'
