Surging Gas Prices: Don't Worry, It's Different This Time

A lot has been made of the similarities between 2011 and 2008, and $4+/gallon gas is high atop the list.

So does that mean we’re going to see a replay of that year’s horror show?

In a note put out last Friday, Citi’s Jeff Black states the never re-assuring phrase “It’s different this time.”

Well, what’s different? Simply, the other economic fundamentals are better.

For example, in 2008, growth in personal consumption expenditures was shriveling, whereas now it’s still growing (nicely, in a v-shape).

gasoline PCE

Photo: Citi

Disposable income was also going in the wrong direction at the time.

gasoline income

Photo: Citi

And finally, the savings rate was at razor thin levels back then, whereas now it’s rebounded.

gasoline income

Photo: Citi

All that being said, it’s not hard to draw a line between softening macro numbers and the surging gasoline prices. We’re not sure if anyone will feel relieved by any of this.

With any luck, gasoline will plunge this summer.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.