It's people like Simi Valley resident Geoff Jameson who keep Fed chief Ben Bernanke up at night.
Jameson, 26, manages a construction crew. I met him the other day at a Westside gas station, where I'd gone to see how $4.50-a-gallon gas is affecting people who have no choice but to keep driving.
"It's not very easy," Jameson said as he spent $150 filling his 2007 Ford F-150 pickup truck. "My girlfriend and I used to eat out quite a bit. That's changing."
This is what Bernanke was talking about Tuesday when he warned lawmakers in Washington that high fuel prices have "sapped household purchasing power" and are creating "significant downside risks to the outlook for growth."
Call it the disappearance of discretionary income. As consumers spend more money on gas -- not to mention food, healthcare and other essentials -- they have less to buy other stuff.
And since consumer spending accounts for about two-thirds of all economic activity in this country, when people start pinching pennies, the effects are felt far and wide.
"There can be a real cumulative effect," said Edward Leamer, director of the UCLA Anderson Forecast. "If people cut back significantly on their spending, service industries will start to lay people off and we could have a real recession."
At this point, high gas prices are having the most profound effect on working-class people. But wealthier drivers are also feeling the pinch.
Beth Bolivar, a 42-year-old technology consultant, said she'd been planning to take her kids to San Diego for the Fourth of July. Instead, they stayed home.
"The beaches here are just fine," Bolivar rationalized.
But her skipped trip translates to hotel rooms not stayed in and restaurant meals not eaten, perhaps a trip to Legoland not taken.
That, in turn, translates to suppliers and distributors who may see orders reduced, or payrolls that may not be met and jobs lost. I exaggerate, of course, but not much.
Leamer said it now appears that the housing market will bottom out this year and -- fingers crossed -- a full-blown recession will be avoided. But that's only if consumer spending remains strong. Retail sales edged up just 0.1% in June, the government reported Tuesday.
"If the pathology that's affecting the housing sector starts affecting consumer spending, we're going to have serious trouble," Leamer warned.
