Oh. Brilliant trick.

Just pronounce some segments of the economy "fat," then when they go, the economy is not really contracting.

Since the 70's our economy's supposed to have gotten pretty efficient with energy, relatively. This is not to say there are not more gains to be made (cutting that fat, I suppose), but we should be safer than the past.

Is the recent hikeup hitting energy intensive economies (China) hard? It would make sense.

We are amazingly wasteful regarding energy. In all aspects of our society, energy is so cheap, we don't even consider it - think of the open refrigerators and freezers in supermarkets. Energy efficiency is the cheapest 'source' of energy and can be as low as 3cents/kWhr. I think energy demand is viscous - elastic but slow. It takes time to adjust to a more energy efficient lifestyle. Awareness, new products, and energy effcient technologies have to be developed and deployed. For example, I'd like to buy a Prius, but my present car is 3 years old and fine. It doesn't make financial sense to trade. But my next car in three years will be a hybrid. When natural gas prices go up, watercooler talk will start to center on insulating hot water pipes, changing HVAC air filters, replacing windows with highly insulating windows, making sure the refrigerator coils are dust free.

Fast changes in energy price force consumers to eat the price before any adaptation, reducing other consumption, thus slowing the economy. The more slowly energy costs increase, the more likely we can adapt and still have a good economy.

Henry