2007 Car and Truck Sales - Perhaps Detroit Would Welcome A Strike?

By: Paul Kasriel | Thu, Aug 2, 2007
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Despite hefty incentives, light motor vehicle sales in July were down month-to-month for the seventh consecutive time this year. Sales crept along at an annual pace of only 15.54 million units. Excluding Katrina-dampened September 2005, this was the weakest monthly sales rate since June 2004. In the first seven months of 2007, light motor vehicle sales are down an annualized 12.03% -- the weakest July-over-December sales rate since 2003 (see table below). Perhaps Detroit would actually welcome a strike by the UAW this September so they could cut costs and clean out some inventories!

Motor Vehicle Sales

Year July/December Annualized Growth in Light Motor Vehicle Sales
2007 -12.03%
2006 0.75%
2005 28.22%
2004 -2.27%
2003 -13.22%
2002 17.00%
2001 13.09%

On a year-over-year basis, it wasn't just the former Big Three that experienced falling sales - even Toyota and Honda posted declines, too. This suggests that something fundamental is going on with the venerable U.S. consumer. He and she are tapped out. Second-quarter's 1.3% growth in real personal consumption expenditures is looking more and more like the new reality. Let's see, housing still is in the tank, consumer spending has downshifted significantly and business spending on equipment is barely growing. It's all good, mate. The remaining 17% of GDP is sure to soar enough to get economic growth back to potential, right? Don't bet on it.



Paul Kasriel

Author: Paul Kasriel

Paul L. Kasriel
Director of Economic Research
The Northern Trust Company
Economic Research Department
Positive Economic Commentary
"The economics of what is, rather than what you might like it to be."
50 South LaSalle Street, Chicago, Illinois 60675

Paul Kasriel

Paul joined the economic research unit of The Northern Trust Company in 1986 as Vice President and Economist, being named Senior Vice President and Director of Economic Research in 2000. His economic and interest rate forecasts are used both internally and by clients. The accuracy of the Economic Research Department's forecasts has consistently been highly-ranked in the Blue Chip survey of about 50 forecasters over the years. To that point, Paul received the prestigious 2006 Lawrence R. Klein Award for having the most accurate economic forecast among the Blue Chip survey participants for the years 2002 through 2005. The accuracy of Paul's 2008 economic forecast was ranked in the top five of The Wall Street Journal survey panel of economists. In January 2009, The Wall Street Journal and Forbes cited Paul as one of the few who identified early on the formation of the housing bubble and foresaw the economic and financial market havoc that would ensue after the bubble inevitably burst. Through written commentaries containing his straightforward and often nonconsensus analysis of economic and financial market issues, Paul has developed a loyal following in the financial community. The Northern's economic website was listed as one of the top ten most interesting by The Wall Street Journal. Paul is the co-author of a book entitled Seven Indicators That Move Markets.

Paul began his career as a research economist at the Federal Reserve Bank of Chicago. He has taught courses in finance at the DePaul University Kellstadt Graduate School of Business and at the Northwestern University Kellogg Graduate School of Management. Paul serves on the Economic Advisory Committee of the American Bankers Association.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The information herein is based on sources which The Northern Trust Company believes to be reliable, but we cannot warrant its accuracy or completeness. Such information is subject to change and is not intended to influence your investment decisions.

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