Commentary
is the Chief Economist for Edmunds.com. Follow @AutoEconomist on Twitter.
contact: editorsAO@edmunds.comArticles by this author:
Operation Twist Won't Help Car Sales
September 26, 2011The Federal Reserve has announced a novel policy called Operation Twist, but it has little ability to make car buyers get up and dance -- or buy cars. Operation Twist plans a reshuffling of the Fed’s portfolio to replace shorter term debt with longer term debt. Its goal is to lower longer term interest rates, in hopes of stimulating borrowing to spur economic growth. Unfortunately, declining consumer confidence and a stalled labor market recovery, not high interest rates, are key factors limiting growth. As a result, this policy is unlikely to have a significant impact on the economy in more
Low Consumer Sentiment Concerning For Car Sales
August 12, 2011Today’s discouraging consumer sentiment reading supports concerns that falling consumer confidence could undermine auto sales momentum in August, although favorable buying conditions and deferred demand remain strong counterforces. Consumer sentiment fell sharply from July’s 63.7 to 54.9 in the mid-month August reading from Reuters/University of Michigan. Consumers have had ample cause for consternation, between the debt crisis in Europe, the debt ceiling negotiations and eventual debt downgrade in the U.S., and the ensuing stock market turbulence. Talk of another U.S. recession has increased as well. Given these factors, it is not surprising that sentiment has taken a dive. In more
Car Sales Just Might Save The Economy
August 8, 2011July car sales, coupled with recent growth in jobs, constitute a direct challenge to growing concerns that the auto industry’s ability to regain sales momentum as production recovers is in jeopardy. Such concerns have surfaced recently as a result of declining consumer confidence and weak economic conditions. However, July car sales increased to 12.2 million units on a seasonally adjusted annualized basis (SAAR), after two months in which sales sharply fell in response to shortages and higher prices. Friday’s jobs report revealed that 117,000 nonfarm jobs were added to the economy in July, contributing positive economic news to what more
Weak 2011 Growth No Threat To Car Sales Now
August 1, 2011Car sales in 2011 have shown growing strength and then weakness, but Friday’s release of Gross Domestic Product (GDP) data reveals a pattern of weakness and then somewhat less weakness for the overall economy during the same period. GDP growth results for the first quarter of 2011 were revised downward significantly from 1.9 to 0.4 percent on an annualized basis. Second-quarter growth came in at 1.3 percent, weaker than the expected 1.9 percent. What does this mean for the auto industry, the largest single industry contributing to GDP? more
Unemployment Is A Speed Bump, Not A Trend
June 8, 2011After three months of healthy job creation, the labor market recovery slowed in May. According to the Establishment Survey, the economy added a mere 54,000 non-farm jobs, a result that fell far short of consensus expectations of 170,000. In addition, both March and April figures were revised downward to 194,000 and 232,000, respectively. Only 83,000 new non-farm private sector jobs were created in May, compared with the 244,000 added on average in February through April. Key private-sector industries adding jobs included professional and business services, health care, and mining, while other private-sector industries saw little change in their employment more
Less Confident Consumers Threaten Car Sales
June 1, 2011Consumer confidence fell from 66.0 in April to 60.8 in May, its lowest level in 2011 to date. Consumers’ assessments of both present and future conditions declined, with the more marked declines on future expectations. In particular, consumers reported more negative expectations regarding job availability and income growth. The drop in confidence represents a sharp reversal of the generally upward trend in confidence since October 2010. more
Car Sales Mini-Bubble Should Last Into 2012
December 5, 2011Auto sales topped 13 million at a seasonally adjusted annual rate (SAAR) for the third month in a row in November. November’s SAAR of 13.6 million demonstrated particular strength, compared to September’s 13.1 million and October’s 13.3 million. But should the auto industry expect this sales trajectory indefinitely? Not exactly. Current sales levels do not reflect a significant shift in underlying economic fundamentals, despite some recent positive indicators. Rather, new car buyers are coming back to the market after delaying purchases this summer when productions shortages from the Japanese earthquake limited supply and raised prices. more