September vehicle sales handily beat expectations (14.87 million vs. 14.5), reaching a new post-recession high. Since the bottom in Feburary 2009, sales are up at a 15% annualized pace, and they are up 13.5% in the past year. That's huge, and it is the very picture of a V-shaped recovery after a devastating and unprecedented decline.
When sales expand at double-digit rates for over two years, this creates a positive shock that ripples throughout the economy: manufacturers, dealers, auto parts makers, and raw material suppliers all do better than they expected, and many have to ramp up production and hire more workers to meet unexpectedly strong demand.
Obviously, numbers like this don't support the imminent recession meme.
No recession starts with year over year car sales like this....
ReplyDeleteThe sizable month-to-month spurt also indicates a strong likelihood of strong September jobs growth. Wouldn't be surprised at +200K.
ReplyDeleteObviously, Scott doesn't read about how these fine auto sales are financed
ReplyDeleteAh yes, the latest excuse of the doom-and-gloom crowd when it comes to auto sales is sub-prime auto loans.
ReplyDeleteHint: What happens when you get a job after you've been unemployed for a long time, and have probably had a lot of late payments on credits cards and maybe mortgages, while you were unemployed, but for your new job you need a car, even though your credit probably isn't that great?
Answer, in case you couldn't guess: You buy a car with a sub-prime loan. Not many lenders will give you a loan if you don't have a job, but lots will give you a loan if you just got a job, even if it's your first one in a while.
So what these sub-prime auto loans are telling you is, lots of people who've been unemployed for a long time are getting jobs, and buying cars. I fail to see how that's bad news.
But how much of this euphoria about car sales is due to govt. fleet purchases, especially of GM cars?
ReplyDeleteGM fleet sales actually went *down* this month.
ReplyDeleteLINK
"Greed is good" - Gordon Gecko
ReplyDelete"Sub-prime is better" - Unknown
If dealer stuffing is the reason for the sales the 'very strong' adjective is invalid.
ReplyDeleteDid a recession ever start with a month over month decline of .9% in NBER personal income or a NBER decline in industrial production of 1.2% and NBER retail sales flatlining?
I would be interested in understanding how many US cars have sold overseas during the past five years -- I assume that number has been increasing over at least the past year -- does anyone have those unit numbers...?
ReplyDelete@Dr. W: I can't find the exact data, but US mainly exports used cars (10% of used car market) overseas, mainly into developing markets (as cars are quite cheap). This helps the used-car market, which helps used-car mkt financing. Loss severity is small when car is repo'd as used car mkt prices are firm.
ReplyDeleteWhere is Scott-"Oh my God, NatGas is so cheap I am about to crap in my pants?" +75% since the lows.
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ReplyDeleteI like all knowledge that you provide in your articles.
ReplyDeleteSubprime auto loan leads
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