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Conflicting and Confusing Economic Indicators

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AUTHOR: Michael l Berard on 9/26/2024

Although I feel I have at least an average level of intelligence, I truly cannot understand many financial issues, that I read and hear, from everyday people, politicians and more.

For example, gasoline prices seem to be a favorite topic, and I wonder why consumers are so concerned as they rise, while the prices of the vehicles have risen so much and why many those same people keep leasing and buying very expensive SUVs, Huge pick up trucks ,etc.

I understand that contractors, plumbers, and the like need trucks, and anybody pulling a boat or camper, but, most people do not need them. Any all wheel, or 4 wheel drive vehicle is more expensive to buy, to repair, and they get much worse gas mileage. Often, they also require premium fuel and if you blow a tire, you often need to replace all four.

If gasoline was indexed to inflation, it would need to be around ten bucks a gallon, and even in California, it is more like six. Also, I have never heard anybody, except me, carp about the price of bottled water, even though at many places, it is over 100 bucks a gallon. A buddy lives in San Francisco, at a concert he attended, a pint of water was 18 , which is 144 per gallon. Even at a dollar a pint, that is still 8 a gallon.

But, gasoline, which has to be removed from the ground or under the ocean , refined , transported, have additives put in, , taxed , etc., is pricey at even 3 a gallon? I do remember gas prices at 29.9 a gallon, but, many brand new cars could be purchased for 2 or 3 grand.

Now, 7 and 8 year car loans are common, with the average monthly payment near 800 bucks. Those big , expensive fussy vehicles also cost more to insure and the 4 German brands depreciate worse than a stone falling off a cliff, because they become endless money pits as they age.

As I walk my dog, I do an informal survey, I roughly count the number of SUVS ,large pick ups, Range Rovers, Mercedes, Porsche,I see driving by,  and compare it to the number of compact, reliable Toyota and Honda sedans and minivans, and Japanese SUVS and so forth. I would guess that the inefficient vehicles, the pricey fancy brands, outnumber the more economical at 5 to 1.

At Bristol Toyota, here in Swansea Mass., I would sometimes swear they sell nothing but SUVS and trucks. There are not many hills here, the area can easily be navigated with only front or real wheel drive, but the majority still buy more than they need.

Also, most people never check the tires for air pressure, they wait until the warning light comes on, and even then , many ignore it. Properly inflated tires improve mileage a lot, and low tires generate too much heat, leading to blowouts.

If you only need a truck a few times a year, rent one instead. For the rest of the time, why not buy a more comfortable, roomier mini van, or a sedan.

A friend of mine bought a brand new top of the line Corvette, she pays over 1300 bucks a month for 8 years at 6 percent, alas, she constantly complains about the gas mileage. She is lucky to get even ten k miles on the tires, and the last one she bought had to have a camshaft replaced at 25 k miles, cost a fortune, but she was fine with that.

Finally, there are two large class a motorhomes for sale near me, I asked the owners why they are selling, and the answers were: Horrible gas mileage.  The huge purchase cost plus the financing costs, the tremendous depreciation and insurance costs , etc. were not a problem .

If anybody has read this far, (thanks, son), my friend , whom is in the suspender and clothing  business, told me that, ” things are holding up well!”, economically.

 

 

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bbbobbins
7 days ago

Hmm. A friend has offered me free use of their RV if I want in the US if I get it recomissioned and new tyres etc on it. But I doubt I will because it’s 30ft on a F350 cab and thus not really manoeuvrable for any sort of boondocks camping and many campgrounds seem to cost as much as a cheap motel. I know they got some good trips with their kids when they were young but overall they’ve told me they’ve had poor return on investment from it.

And of course in later age they now prefer to fly to Europe get a small rental car and explore for a few weeks.

Bob G
7 days ago

Car Guy here. All my life I’ve driven nothing but semi-high performance 2-door sport coupes with manual transmissions and, yes, the last two have been BMWs. All my wife wants is a three-row SUV (currently Toyota) large and safe enough for most of the grandchildren to fit in. We do get a few snows in the winter, so 4-wheel drive as an occasionally-used necessity. For her, safety is my top priority as she is, by far, my most valuable asset. For me, it’s all about the experience (non-car guys wouldn’t understand). I take care of them, do some of the routine maintenance, and am disappointed when they don’t last at least 15 years or longer. Works for us!

Winston Smith
7 days ago

All my ‘motorhead’ friends suggested we buy Subarus.

We paid cash for it 4 years ago and get it serviced regularly at the dealer. It gets acceptable, not great, gas mileage. But it does have all the driving assistance features geezer/boomers like us appreciate and need.

The only drawback has been the Subaru brand batteries that only seem to last for a couple of years. We’re on our third one.

OldITGuy
8 days ago

Whether it’s automobiles, motor homes, student loans, the high divorce rate, or just the foods we eat and how well (or poorly) we take care of our bodies, so many of us seem to consistently make poor choices. I suspect it’s always been this way, but if not, what’s changed? I don’t know but I suspect it’s always been this way and we simply see it more as our society makes it easier to make big mistakes with things like easy credit, cheap junk food, etc etc. Just my 2 cents.

R Quinn
8 days ago

Gasoline is a global commodity and the oil companies are international organizations. I don’t think its price and their changes can be compared with other items.

My 2014 Mercedes gets 31 MPG on Highway and 27 in the city on premium gas. Yes, it is expensive to maintain, especially using a dealer.

I paid cash in 2014 and I will keep it forever, because buying it was not about status or luxury, but a lifelong goal and promise to my Dad back in 1960 when I was 17.

OldITGuy
8 days ago
Reply to  R Quinn

Actually, over 80% of the oil produced in the USA is done so by independent oil companies. The large multi-national oil companies only produce about 17% of USA supply. The percentage of natural gas by independents is even higher. Independent Petroleum Association of America | Who Are America’s Independent Producers? (ipaa.org)

baldscreen
8 days ago

I would like to add one caveat to your next to last sentence. I would be cautious buying a used Honda because there is a paint defect on the white ones and a few other colors. It is well documented online. We bought a white Odyssey used and found this out when the paint started peeling badly several years after we bought it. Honda will not do anything to help fix the issue. We also had a recall on the transmission, and, conveniently, were just out of the warranty period. We have learned our lesson. Back to Toyota for us. I try to warn everyone about Honda. They are not what they used to be. Chris

Olin
8 days ago
Reply to  baldscreen

We love, love, love Toyota vehicles. I sometimes feel guilty saying that as I grew up in the state where the big 3 auto makers are headquartered. When we bought our first Toyota in 1997, there was no going back.

Andrew Forsythe
8 days ago

I agree 100% on all the vehicle “over-buying”. I see the same ratios down here in central Texas—the pragmatic sedans and hatchbacks completely outnumbered by the gigantic gas guzzling trucks and SUVs.

In particular, I see so many huge shiny black Suburbans and Tahoes. I can’t help thinking, “There goes another Secret Service wannabe.”

Jeff Bond
8 days ago

Michael – We’re on the same page as far as automobiles are concerned. Here’s my HD article on cars I’ve owned. I live in a college town, so I see an interesting mix of economy cars and big honkin’ SUVs and trucks. I’m also amused by the aftermarket exhaust systems that are designed to be louder than normal.

Even my Subaru Forester, which is generally an economical car to drive, requires truck tires when replacement is required.

Last edited 8 days ago by Jeff Bond

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