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Smoke on Cars

Auto Market Weekly Summary

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Article Highlights

  1. There’s been an upward revision of the first quarter’s real GDP to a 1.4% annualized increase from the previous estimate of 1.3%.
  2. Consumer spending growth saw a slight acceleration to 0.2% in May, though weaker than expected.
  3. May experienced a slump in new home sales, which were weaker than anticipated, with an 11.3% decrease in month-over-month comparison and a 16.5% decrease in year-over-year comparison.

Highlights

  • There’s been an upward revision of the first quarter’s real GDP to a 1.4% annualized increase from the previous estimate of 1.3%.
  • Consumer spending growth saw a slight acceleration to 0.2% in May, though weaker than expected.
  • May experienced a slump in new home sales, which were weaker than anticipated, with an 11.3% decrease in month-over-month comparison and a 16.5% decrease in year-over-year comparison.

Increased GDP and Personal Consumption

First quarter GDP growth was revised up in the third and final estimate to 1.4%, but consumer spending revised down to a larger 2.3% decline.

  • Notably, gross private investment was revised to a growth of 4.4% from 3.2%.
  • Personal consumption was revised down to an increment of 1.5% from 2.0%.
  • Spending on goods was revised down to a 2.3% decrease.
  • Spending on services was revised down to a gain of 3.3% from 3.9%.

Consumer Spending Growth

Consumer spending growth accelerated in May but came in weaker than expected even though income growth accelerated.

  • Consumer spending growth accelerated to 0.2% in May.
  • Personal income growth quickened to 0.5% from 0.3% in April.
  • Employee compensation growth also accelerated to 0.6% from 0.2% in April.
  • Proprietors’ income remained steady for two consecutive months.

Housing Market Trends

New and pending home sales declined in May. All measures of home sales declined in May.

  • May observed a significant drop in new home sales, with an 11.3% decrease month over month and a 16.5% decrease year over year.
  • The entire country saw a decline in new home sales.
  • New home inventory climbed by 1.5% month over month and 12.9% year over year.
  • Pending home sales also reduced by 2.1% in May, a 6.6% decrease year over year.

Consumer Confidence

Consumer confidence declined in June, and measures of consumer sentiment also showed modest declines for the month.

  • Although consumer confidence dipped 0.9% in June, the consumer sentiment index from the University of Michigan declined 1.3% in June compared to May but was up 6.2% year over year.
  • The median consumer expectation for inflation in a year dropped to 3.0%.
  • Plans to purchase a vehicle in the next six months decreased compared to May.
  • The national average price for unleaded gas, according to AAA, dropped 1.2% from the end of May to $3.50 per gallon as of June 28.
Jonathan Smoke
Chief Economist

Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.

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