Checking on the Economy

Weekly Economic and Automotive Market Summary

Economic data from this week is shifty and marked by the term “accelerated depreciation,” which are the words we would use to describe that feeling in your chest when you drink too much cold coffee and then sit to read a book.

Automotive Market Insights:

• Wholesale prices experienced the most considerable single-week decline since mid-January.
  • Overall, the market depreciated by 0.49%, up from the previous week's 0.15%.
  • Truck and SUV segments faced a 0.55% drop.
  • The compact crossover segment plummeted by 0.78%, marking the most significant decline.
• Car Segments:
  • Mixed performance with an overall decline of 0.34%.
  • Sub-compact cars led the decline with a 0.77% drop, continuing eight weeks of depreciation.
  • Sporty and premium sporty cars showed resilience with minimal gains of 0.03% and 0.01%, respectively, continuing a positive trend for ten weeks.
• Used Retail Market:
  • Inventory remains robust, with an estimated day-to-turn time of approximately 40 days.
  • The average auction sales rate dropped by 2% to 53%, reflecting cautious market sentiment amid fluctuating wholesale prices.

Broader Economic Overview:

Zooming out from the automotive sector, we see a GDP slowdown, causing consumer spending to drag its feet. They’re still spending, but they’re less pumped about it.

• GDP and Personal Income:
  • Fourth-quarter GDP growth revised down to 1.3% from 1.6%.
  • Personal consumption adjusted to a 2.0% increase from 2.5%.
• Personal Income Growth:
  • Decelerated to 0.3% in April from 0.5% in March.
  • Employee compensation growth slowed to 0.2%.
• Spending Breakdown:
  • Spending on goods declined by 0.2%, and services decelerated to 0.4%.
• Pending Home Sales:
  • Dropped 7.7% in April, highlighting ongoing challenges in the housing market.
  • Midwest experienced the most significant decline both monthly and annually.
• Consumer Confidence:
  • Mixed signals with the Conference Board's index rising by 4.6% in May.
  • University of Michigan's sentiment index fell by 10.5%.
  • Gas prices declined by 2.8%, potentially boosting sentiment in June.

In summary, trucks and SUVs, once the big moneymakers, are facing depreciation pressure as other mixed economic factors urge consumers to use their cash more cautiously.