Used Car News

Is the economic recovery starting to stall out? Or was it just stuck in the snow?

Many economic indicators pointed in the wrong direction last month, including employment, consumer confidence and home sales.
Much of the bad news came as a surprise to observers and raised the possibility that they economy could fall into a double-dip recession.
“It’s certainly possible,” said Manheim chief economist Tom Webb. “It’s not my expectation.”
Paul Taylor, chief economist for the National Automobile Dealers Association, said February’s extreme weather played a bigger part than economic fundamentals.
“Everything for the month of February is going to look horrible because the entire East Coast shut down,” Taylor said. “The underlying economy continues to grow.”
Auto sales definitely suffered from the snow as consumers avoided trudging through the snow to look at cars.
“Record snow in the Mid-Atlantic states paralyzed sales in those regions for several days during the month, demonstrating that acts of God can also have their effects on what is proving to be a very fragile recovery,” said Jack Nerad, executive market analyst for Kelley Blue Book.
Taylor said the snow effect goes beyond sales and showed itself in the higher unemployment numbers.
A worst-case scenario is if inflation starts rising before unemployment declines. That’s what happened in the 1970s.
The consumer price index rose in January and has been rising for the past year. The index was actually down when certain items were excluded, but those items directly impact the used-car buyer.
The biggest increase was the price of gasoline.
A gallon of gas cost $2.70 on average at the beginning of March, according to AAA. That’s up from $1.93 a year ago.
The index for used cars and trucks increased significantly for the sixth month in a row, according to the Bureau of Labor Statistics.
Prices for groceries shut up as well.
Webb said the economy was probably too weak for any real threat from inflation, but he admitted that’s what most economists thought in the ‘70s, too.
Any increase can affect used-car buyers.
“Households don’t have a lot of flexibility in their budgets,” Webb said.