It's Spend, Spend, Spend! But for How Long?

"Buy! Buy! Buy!" With a vigor generally only seen in traders on the floor of the New York Stock Exchange, American consumers continued their purchasing frenzy in February, snapping up new clothes, furniture and appliances and pushing retail sales to higher-than-expected gains. This buying frenzy flew in the face of widespread predictions that rising interest rates and a volatile stock market would blunt the national urge to shop. Americans are supremely confident, it seems, in the robust economy and in the stock market's ability to withstand any bumps in the road: A March 12 Gallup poll shows that nearly 75 percent of investors view recent market volatility as "normal market fluctuation," rather than an indicator of impending slowdown.

Of course, every silver lining has a cloud, and in the shadow of all this optimism, there is one corner of the economy making consumers nervous. Climbing gas prices — spurred by OPEC's slow contraction of the oil market — have nudged pump registers toward the two-dollar mark. It's proving difficult, though, to pinpoint what effect, if any, the gas prices are having on consumers. Some figures show a general upswing in car buying, including gas-guzzling SUVs; others show a downturn. Meanwhile, analysts point to the fact that gas still costs proportionately less than it did 20 years ago. It'll probably all come down to how long the high prices continue. Predictably, the non-incumbent politicians are licking their chops as this story develops. If gas prices don't start heading south, the vice president could face a serious problems on the subject from George W. Bush. "On the campaign trail, Bush has made it clear that his father was able to establish good relations with key OPEC members like Saudi Arabia and Kuwait after the Gulf War," says TIME economics writer Bernard Baumohl. The subtext is clear: If they're not careful, Clinton and Gore could be painted as the administration that stole America's vacation time and locked up its Range Rovers.