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Fed Quest for Pain Already Reducing Demand in Auto

The Fed raised the target for the Federal Funds Rate by three-quarters of a percentage point today, making another aggressive move to, as Fed Chair Jerome Powell suggests, induce “pain in the economy” as the cost of reducing inflation. The biggest news was not today’s increase, but the plans for where rates go from here. … Continued

Auto Loan Defaults Are Increasing, But We Are Not Heading Into A Repo Crisis

As I noted after their July meeting, the Federal Open Market Committee has moved the target rate more in the past two months than at any point since 1981, and they are not done yet. The Fed’s aggressive stance on tackling inflation has resulted in increased borrowing rates that will likely move to 3.5% or … Continued

July Delivers Higher Auto Rates with the Fed Promising More Ahead

As widely expected, the Fed raised the target for the Federal Funds Rate by three-quarters of a percentage point today as it remains steadfast in its goal to rein in inflation. Combined with the increase made in June, the Fed has now moved the target rate more in two months than at any point since … Continued

The Used-Vehicle Market Is Beginning To Feel Normal Again, and That Is Good News for the Industry.

Earlier this month, during our quarterly Manheim Used Vehicle Value Index (MUVVI) conference call, there were a significant number of questions related to the health of the U.S. economy, inflation, and the impact used-vehicle prices are having on inflation. These are all important topics that are worth addressing. First, as I noted during the call, … Continued

Auto Market Weekly Summary

The job market continues to be one of the strongest parts of the economy and is showing no signs of new stress. Meantime, the housing market is suffering the most from the dramatic increase in mortgage rates. Total new home sales are down from a year ago, while mortgage rates rose more than 2.5 percentage … Continued

Auto Market Weekly Summary

Retail sales in May declined more than expected, and inflation pressures led to continued shifts in the pattern of spending. Adjusted for inflation, retail sales were down compared with a year ago, but spending remains quite robust on a nominal basis. Consumers are spending more on gas and groceries but less on cars, electronics, appliances … Continued

The Race Is On: Low Vehicle Payments Versus the Fed

The Fed raised the target for the Federal Funds Rate by three-quarters of a percentage point today as it becomes more aggressive in its quest to rein in inflation. The increase in the target rate was the largest in almost 28 years. The Fed has now increased the target rate by 1.5 percentage points and … Continued

Auto Market Weekly Summary

Financial markets sold off Friday with the report on the Consumer Price Index showing inflation accelerating again in May. Inflation is also weighing on consumer attitudes as measures of consumer sentiment have shown further declines.  The gains in inflation were broad based, but energy, food, shelter and vehicles played outsized roles in the monthly acceleration. … Continued

Auto Market Weekly Summary

The May employment report showed a slight slowing in job growth that exceeded expectations at 390,000 jobs created, and the unemployment rate was also unchanged at 3.6%. Labor force participation increased, and growth in average hourly earnings year over year slowed. Consistent with a strong labor market, continuing claims keep falling and are now at … Continued

Auto Market Weekly Summary

Real GDP declined in the first quarter slightly worse than originally estimated, but mainly because of net exports and declining inventories. Consumer spending remained robust and improved in the latest estimate. Consumer spending slowed in April but remains strong. Income growth slowed, and the savings rate declined. The housing market saw further declining momentum in … Continued