Tuesday, 19 of February of 2019

Economics. Explained.  

Car and Truck Sales

February 5, 2019

Unit car and truck sales plunged 5.1% in January to a 17.1 million pace which represents a declined of 2.6% since January of last year.  While car sales fell sharply in January, that followed the stock market meltdown in the fourth quarter of last year, and came amidst the federal government shutdown.  The stock market has recovered much of its fourth quarter loss, and the shutdown has finally come to an end.  So while the January drop was disturbing, sales should recover in the next couple of months for a couple of reasons.

Consumer confidence got hit in recent months for the same reasons but it, too, should bounce back.

Confidence will recover simply because the economy continues to crank out 200 thousand jobs per month.  Steady growth in jobs means continuing growth in income.  At 4.0% the unemployment rate is close to a 50-year low so almost everyone who wants a job has one.

Driven by the steady jobs gains, real disposable consumer income (what is left after taxes and inflation) is rising at a solid pace.

Finally, keep in mind that consumers have paid down tons of debt and are now in a position to spend.  For all of these reasons we look for  2.7% GDP growth in 2019 after a 3.1% increase in 2018.  Growth of that magnitude suggests that cars sales will remain healthy for the foreseeable future.

Stephen Slifer


Charleston, SC

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