Auto Market Weekly Summary

Highlights:

• Real Gross Domestic Product (GDP) increased at an annual rate of 3.0% in the second quarter of 2024, according to the “second” estimate released last week.
• Consumer spending growth accelerated to an impressive 0.5% in July, up from the 0.3% growth seen in June.
• The Conference Board’s consumer confidence index increased by 1.4% in August, an outcome better than initially expected.

Gross Domestic Product (GDP) and Consumer Spending

The GDP growth in the second quarter was revised up to 3.0% annualized from the initially estimated 2.8%.

• Real GDP growth on a year-to-year basis remained steady at 3.1%.
• Spending on goods saw a hike of 3.0% from an initial 2.5% increase, while service spending was revised up to a 2.9% gain from 2.2%.
• Expenditure on motor vehicles and parts jumped 3.3% after a 3.0% decline in June from the CDK software disruptions.

Personal Consumption

The Personal Consumption Expenditure Index (PCE), the key gauge of inflation that the Fed follows, increased 0.2% in July, as expected, after increasing just 0.1% in June.

• The core inflation rate grew 0.2% in July, which was more than the 0.3% growth expected and followed an upwardly revised 0.3% gain in June.
• Factoring in inflation, real spending increased 0.4% in July, which was more than the 0.3% growth expected and followed an upwardly revised 0.3% gain in June.

Pending Home Sales

Like new home sales, pending home sales have experienced a decline, contrary to expected increases.

• Pending home sales, which reflect new contracts signed on existing homes, declined 5.5% in July despite the availability of increased inventories and declining mortgage rates.
• This decline has happened across all regions in the country, with the highest in the Midwest region (7.8%) and the smallest in the Northeast (1.4%).

Consumer Confidence

Consumer confidence, according to the Conference Board, rose by 1.4% in August, which was better than expected and was adjusted higher for July as well.

• Consumer confidence saw a 5.0% decrease on a year-to-year basis.
• However, both views of the present and future saw improvements in August.
• Despite the overall growth in consumer confidence, plans to purchase a vehicle in the next six months declined compared to July, reaching the lowest level since February and lower than July last year.

According to the University of Michigan index, consumer sentiment increased 2.3% in August compared to July but was down 2.2% year over year.

• The consumer’s perception of vehicle buying conditions remained steady, but negative views of interest rates and prices persisted.

The daily index of consumer sentiment from Morning Consult improved further in August, extending a streak of three-monthly gains, but it lost some momentum last week.

• The index was up 0.6% for the month as of Friday, which left the index up 5.8% year over year.