Wednesday, 22 of November of 2017

Economics. Explained.  

Car and Truck Sales

November 5 2017

Unit car and truck sales retreated by 2.6% in October to a an 18.0 million pace after having jumped 15.3 % in September to 18.5 million  units.  The annual rate of 18.0 million is 1.1% higher than it was at this time last year.  This surge in sales in the past two months reflects an almost immediate impact from Hurricanes Harvey and Irma.  Thousands of  cars were lost from flooding and now need to be replaced.  We expect car sales to remain relatively robust for some time to come for a couple of reasons.

First, home sales remain at s solid pace.  Because car and home sales are the two biggest ticket items in a consumers budget, it is not surprising that a change in trend will be evident in these two categories first.  In this case both car and home sales seem pretty solid.

Second, the stock market is at a record high level.  That is an indicator of investor sentiment.  A rising stock market also boosts consumer net worth.

Third, all measures of consumer confidence are at their highest levels thus far in the business cycle.

Fourth, tax cuts to both individual and corporate income tax rates are likely in store later this year or in 2018.

And, finally, consumers have paid down tons of debt and are now in a position to spend.  Jobs are climbing at a pace of 170 thousand per month.  The unemployment rate has fallen to a level that is below the full employment mark.  Consumers are benefiting from stable and still low gasoline prices. For all of these reasons we look for steady 2.3% growth in 2017, and 2.8% in 2018.

Stephen Slifer

NumberNomics

Charleston, SC


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