Strange how the economy works sometimes -- in the third quarter of 2008, American consumers cut their spending more sharply than at any point since the second quarter of 1980, forcing a contraction in national GDP of 0.3 percent. At the same time, Exxon-Mobil reported its most profitable quarter ever, raking in $14.8 billion of profits.
There's a clear connection, naturally -- the price of oil was an important factor in encouraging Americans to cut back, even as it fattened Exxon's coffers. And that dynamic is about to flip on its heads. Here's a guess: Exxon won't make record profits in the fourth quarter of 2008, and Americans will drive more. (They already are.) But the picture is still not too pretty: The U.S. economy shrinks, while Exxon mints money. Too bad we don't have a Marxist revolutionary running for President on a campaign of redistributing the ill-gotten gains of the plutocrats to the suffering proletariat.
You may have heard different, but it's true: we don't. In fact, the Obama campaign has already acknowledged that its plans for a windfall tax on oil company profits are likely dead in the water, as long as gas and oil prices keep falling. (In California, gas prices are already 35 percent off their highs. Road trip!)
One quarter of economic contraction does not necessarily imply a recession -- the rule of thumb is two in a row -- but when you recall that there was also negative growth in the fourth quarter of 2007, it's hard to argue that we're not already hip deep in one.
Maybe that road trip isn't such a great idea, after all.