“Not so bad” meaning “equally good and bad on either side of the coin,” is how Cox Automotive chief economist Jonathan Smoke sized up the economic outlook for 2020.
Unemployment is at a 50-year low, consumer sentiment continues to be “relatively high” and consumers are seeing strong wage and income growth, he said.
But there are caveats.
Smoke is concerned that economic growth is “slowing”, and he expects a record number of subprime auto delinquencies in the first quarter of the year — “even more than we saw during the great recession.”
Cox Automotive senior economist Charlie Chesbrough said there is a “slowdown” in the new-vehicle market, too. And while stressing that he’s not predicting a recession, Chesbrough believes if there is a recession, light trucks, as a segment, will be shunned as consumers seek financial refuge in less expensive new compact cars and sedans and used SUVs, crossovers and pickups.
Cox Automotive also forecasts that the industry will sell 16.6 million new vehicles this year, “a healthy number” but in a market that will be more challenged, Chesbrough said. The forecast is down from the 17 million-plus new-vehicle sales the industry has seen over the last few years.