- Economic growth slowed and likely to slow more.
- Consumers scaled back spending growth.
- September new vehicle sales volume drops.
Economic growth slowed in the second quarter and is likely to be much slower in the back half of the year compared with the first half of the year.
Tame inflation: Inflation has been tame, mainly as a result of lower prices for food and energy, but now some of the consumer surplus provided by lower gas prices has started to diminish.
Consumer spending slows: Consumers slowed down spending growth in August as sentiment started to sour. The consumer was the source of economic growth in the second quarter, but consumers’ diminishing expectations about the future may lead to a further slowdown in spending even though employment remains at historic levels and income gains remain strong.
Housing gains but may stall: Housing has seen promising gains this summer thanks to lower mortgage rates, but consumers’ plans to purchase in the next six months are going down.
New vehicle sales: September will deliver startling volume declines in new vehicle sales relative to August and compared to September last year as a result of this September having fewer selling days and none of the Labor Day weekend sales days.
However, we expect the SAAR, which adjusts for the calendar differences, to come in at 16.9 million, which is relatively stable with last month’s 17.0 million SAAR. As has been the case for more than a year, fleet sales and incentives will determine if we hit 17 again. To hear more about our read on the auto market, check out the presentation and listen in on the Cox Automotive Q3 Auto Sales Call.
Looking ahead: This week, we’ll get new vehicle sales and the employment report for September. We’ll also be watching the UAW strike against GM, which is entering its third week.