- New vehicle sales closed 2019 at around 17 million.
- Consumers are wary about the future.
- U.S.-Iran tensions hit markets, oil.
We ended 2019 with mostly positive data. Home sales continue to be strong as both new home sales and pending home sales increased in November. But news starting 2020 has been less so.
Wary consumers: Consumer confidence failed to see improvement in December, but it isn’t declining either. The main concern is that consumers do not feel as good about the future as they do about the present.
Fed holds rates: The Fed is waiting for material changes to economic data to do anything further with rates. As of December, they were generally seeing declining risks.
2020 concerns: The news to start 2020 has not been as positive. The markets are worried about an escalating conflict between the U.S. and Iran, so oil prices and bond prices increased as stock indices and bond yields fell. If the conflict broadens, oil prices will likely increase further, sapping consumer discretionary spending and sending stock prices lower. At least the energy sector will see growth in the U.S. if indeed oil prices move higher.
Vehicle sales down: New-vehicle sales will likely end up lower in December than expected and down from November and last year, but sales may be enough to see 17 million for the year after rounding.
Looking ahead: This week we will get the employment report for December, a more complete review of December new-vehicle sales, and some more readings on manufacturing. We will also report on final new-vehicle numbers, December used-vehicle prices and sales.