Gregor Macdonald writes:

The present reflation will do very little for individual Americans. If 11.6 per cent  unemployment in California during a time of $72 oil doesn’t make the point, then perhaps 15 per cent  unemployment and $100 oil will.

Higher equity prices alone, unless accompanied by organic growth that is both broad-based and real, will not be enough to offset the effects of higher interest rates, higher energy costs, stagnant job growth, falling wages in real terms, and a ravaged housing market. While these competing forces are at play in nearly all places in the United States, they are particularly acute in the golden state of California.

California has over 35m residents, and 22m of them live in the big, populated counties of the south. Known as “SoCal”, this is the part of the state where the single family, detached home is common and where most residents have to commute long distances by car. The five big counties of the south – Los Angeles, Riverside, San Bernardino, Orange, and San Diego – were not built to handle $100 oil (the average price in 2008), let alone $150 oil. They were not even built to handle $75 oil.