Don't Worry About Commodity Prices

While the Ben Bernanke Plays Down Gas-Price Rise today, the economists at BNP Paribas believe that higher commodity prices reduce demand for services in the United States:

The latest personal spending report suggests that higher commodity prices represent a risk of creating a "taking from Peter to give to Paul" situation. In the absence of a robust pick up in wages consumers have to cut on services to pay for more expensive goods.

Click on chart to enlarge, courtesy of BNP Paribas.

Hmmm, discretionary spending ... BTW, who is that Ben Bernanke, the expert on subprime being contained?