Auto Market Weekly Summary

Key Highlights

• Consumer spending on motor vehicles and parts declined by 2.0% in August, after a July jump as activity recovered from software disruptions.
• Consumer confidence saw an unexpected drop of 6.5% in September.
• Consumers’ plans to purchase a vehicle improved as views of buying conditions reached their highest level since April.

Economic Indicators and Consumer Spending

According to the final estimate, second-quarter real GDP growth was unchanged at a strong 3.0%. GDP history was revised modestly upward back to 2019. Consumer spending growth slowed in August. July’s growth was abnormally strong due to an unusual increase in auto sales and service caused by disruptions in June.

• GDP Growth: The second quarter real GDP remained unchanged at a 3.0% annualized increase.
• Consumer Spending: Growth decelerated to 0.2% in August from 0.5% in July and was weaker than anticipated.
• Personal Income: Growth slowed to 0.2% from 0.3% in July and was weaker than expected.
• Spending on Motor Vehicles and Parts: Declined by 2.0% after a 4.2% jump in July as activity recovered from the CDK software disruptions.

Inflation and Real Spending

The Personal Consumption Expenditure Index, the primary measure of inflation tracked by the Fed, rose in August as anticipated, along with real spending.

• Personal Consumption Expenditure Index: Increased by 0.1% in August.
• Overall Price Inflation: Declined more than expected to 2.2% year over year, the lowest since February 2021.
• Core Inflation Rate: Increased to 2.7%, which was less than expected.
• Real Spending: Increased by 0.1% in August, following a 0.4% gain in July.

Housing Market Trends

The housing market experienced a decline in new home sales in August, although the figures were better than expected. Pending home sales rose modestly.

• New Home Sales: At an annualized pace of 716,000, declined by 4.7% month over month but up 9.8% year over year.
• New Home Inventory: Increased by 1.7% month over month and 9.1% year over year to 7.8 months, which is considered modestly elevated.
• Total Home Sales: Down by 2.9% for the month and 2.3% year over year.
• Pending Home Sales: Increased by 0.6% in August but down 3.0% year over year.

Consumer Confidence and Sentiment

According to the Conference Board Consumer Confidence Index®, consumer confidence unexpectedly declined in September, with significant declines in both present and future outlooks. However, consumer sentiment, according to the index from the University of Michigan, showed some improvement. Consumers’ plans to purchase a vehicle improved as views of buying conditions improved to the best level since April.

• Consumer Confidence: Declined by 6.5% in September, down 5.4% year over year.
• Consumer Sentiment Index from the University of Michigan: Increased by 3.2% in September compared to August.
• Daily Index of Consumer Sentiment from Morning Consult: Up by 1.4% for the month as of Sept. 27, which leaves the index up 8.6% year over year.
• Inflation Expectations: Median expectation for inflation in a year declined to 2.7%, the lowest since December 2020.

Gas Prices

Gas prices have notably declined in September, as of Sept. 26. The national average price for unleaded gas dropped by 3.4% from the end of August.

• Price of Unleaded Gas: Down to $3.22 per gallon, a 16% year-over-year decrease.