This edition of the Auto Market Weekly Summary includes updates on Gross Domestic Product (GDP) and inflation, personal income and spending, consumer confidence, and housing price trends. The Federal Reserve met last week and held rates steady as expected, although the decision was far from unanimous. Recent economic data added to the uncertainty, as inflation accelerated and consumer spending held up despite signs of strain.

Bottom Line Up Front

The Federal Reserve’s rate hold was the most divided in over three decades, with four dissents reflecting genuine disagreement within the committee about the path forward. This uncertainty from the Fed is not a welcome development for an industry already navigating a difficult affordability environment. For a deeper dive into the Fed news, vising Cox Automotive Insights.

On inflation, the data offered little comfort. The Personal Consumption Expenditures (PCE) deflator rose, driven by energy costs that are persistently working their way into consumer expectations. Consumer spending held up in March, with motor vehicles and parts a genuine bright spot, but the personal saving rate has fallen to its lowest level since late 2022, a sign that household resilience is being tested.

National home prices continued to deteriorate. They were higher by 0.7% year over year in the latest measure, and more than half of tracked metro markets are now posting declines. This is the continuation of a correction that is eroding the wealth base that supports consumer confidence and discretionary spending.

Gross Domestic Product and Inflation

The initial read on GDP came in slightly below expectations for the first quarter, as continued expansion in government spending and investment partially offset a meaningful drag from net exports. The Fed’s preferred inflation measure was also reported this week for March, coming in as expected, though the headline number reflected the sharpest annual acceleration in four years, driven largely by surging energy costs.

  • Annualized GDP grew at 2% in Q1, a recovery from the 0.5% pace in Q4 2025. The prior quarter was weighed down significantly by the government shutdown, and the rebound from that disruption contributed to Q1’s improvement.
  • GDP growth came in modestly below the consensus estimate of 2.3%, even as continued investment in AI infrastructure provided support.
  • Consumer spending contributed positively to Q1 growth, though at a slower rate than Q4. Services spending remained the stronger component, offsetting a modest decline in consumer goods expenditure.
  • The PCE deflator rose 0.7% in March, pushing the year-over-year gain to 3.5%. This was the first time the measure exceeded 3% since October 2023.
  • Core PCE rose 0.3% against February, in line with expectations, though it pushed the year-over-year rate up to 3.2%.
  • Gas prices, the primary driver of the March PCE acceleration, hit $4.30 nationally last week and continue to climb, reaching a new high for the year and a 44% increase since the Middle East conflict began.

Personal Income and Spending

March data from the Bureau of Economic Analysis showed nominal income rebounding sharply, though elevated inflation eroded purchasing power and pushed the savings rate lower as consumers absorbed higher energy costs.

  • Personal income rose 0.6% in March, exceeding expectations and marking the strongest month-over-month gain since July 2025.
  • On an annual basis, nominal income growth rate has decelerated every month since September. It slowed to 3.7% year over year in March.
  • Personal consumption expenditure rose 0.9% in March on a nominal basis, driven primarily by higher energy costs. In real terms, consumer spending rose a modest 0.2%, following a 0.3% gain in February.
  • Within real spending, durable goods were a bright spot, rising 0.9% and led by motor vehicles and parts, which increased 2.4% and thanks in part to continued tailwind from healthy tax refunds.
  • The personal saving rate fell to 3.6% in March. That was the lowest measure since late 2022, as consumers drew down savings to cover rising living costs.

Consumer Confidence

Consumer confidence, as measured by the Conference Board, edged higher in April for the third consecutive month, but the reading remains below its long-run average as energy price concerns keep households cautious.

  • The Conference Board’s Consumer Confidence Index rose 0.6 points to 92.8 in April from an upwardly revised 92.2 in March, with the Present Situation Index slipping slightly and the Expectations Index ticking up 1.2 points to 72.2.
  • Inflation expectations remained elevated at 6.1% for the 12-month horizon, and the share of consumers expecting interest rates to rise over the next year jumped to a net 49.2%, the highest reading in more than two years.
  • Plans to purchase a used auto rose, while plans for new-vehicle purchases were largely unchanged.

Housing Price Trends & Mortgage Rates

The S&P Cotality Case-Shiller National Home Price Index rose just 0.7% year over year in February, slipping from January’s 0.8% gain and marking the slowest annual appreciation in roughly three years. The 20-City Composite fared modestly better at 0.9%, but monthly momentum continues to fade. Seasonally adjusted prices across the 20-City index declined in February, the latest sign that the deceleration is not stabilizing.

  • The housing slowdown has broadened well beyond its Sun Belt origins. More than half of the 20 tracked metro markets posted year-over-year price declines in February.
  • For the ninth consecutive month, inflation outpaced national home price appreciation, with recent Consumer Price Index (CPI) reading up by 2.4% while home prices were higher by only 0.7%, extending the streak of negative real home price returns.
  • Regionally, Denver (-2.2%) displaced Tampa (-2.1%) as the weakest market in February, with Seattle (-2%), Phoenix (-1.8%), and Dallas (-1.7%) close behind.
  • Los Angeles (-0.8%) and Washington (-0.1%) joined the list of decliners for the first time, signaling that the correction is no longer confined to pandemic-era boom markets.