Two months ago, I wondered if rising gasoline prices threatened retail sales. At the time, energy costs were rising, taking an increasing bite out of consumer purchases. It looked like a train wreck. Consumer purchases, after all, represent roughly 70% of GDP. But gasoline prices hit a ceiling in early May and have been flat to moderately lower ever since. There’s no assurance that prices won’t resume taking flight, but for the moment there’s been a slight reprieve on the energy-based assault on retail sales.

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Our Real Deficit Problem Has Nothing to Do With Traditional Government
The Atlantic | July 25
In 1960, the last full year of the Eisenhower administration, taxes were 17.8 percent of GDP and primary spending (excluding interest) was 16.4 percent. Social Security took in and paid out 2.2 percent. Medicare didn’t exist. So Everything Else had a primary surplus, with taxes at 15.6 percent and spending at 14.2 percent.
In 2010, in the supposed age of “big government,” spending on Everything Else was only 14.7 percent of GDP, and that was swollen by the recession and stimulus spending. By 2021, according to the CBO’s alternative fiscal scenario (the pessimistic one), spending on Everything Else will be 13.0 percent–less than in 1960. Everything Else tax revenues–that is, everything except the Social Security and Medicare payroll taxes–will be 12.5 percent of GDP, for a primary deficit of only 0.5 percent. And that’s assuming that all of the 2001, 2003, and 2009 tax cuts are extended indefinitely.

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