Money Moves

Economic Weekly Overview

The U.S. economy showcased a robust expansion at a 3.3% annualized rate in Q4 of 2023, surpassing expectations with a mix of strong trade growth and consumer spending. 

• Earnings Reports – Operating EPS (earnings-per-share) at $51.73 indicates a YOY growth of 2.7%, with technology and communication sectors thriving. Energy, on the other hand, is facing some headwinds from lower oil and gas prices.
• Labor Market Strength – January's jobs report revealed a 353K increase in nonfarm payrolls and a stable 3.7% unemployment rate, showcasing labor market vitality and tempering expectations for Fed rate cuts before summer.

Pesky Inflation

Inflation remains stubbornly high, with core annual CPI (consumer price index) at 3.9%, (nearly double the Fed's 2% target), which has injected a dose of reality into the market's outlook.

• CPI and Rate Cut Expectations – January's core CPI at 3.9% dampens hopes for imminent rate cuts, shifting the earliest expectations to June.
• Fed's Cautious Stance – Fed Chairman Jerome Powell emphasizes the need for sustained evidence of inflation moving towards the 2% target before any rate adjustments.
• "Greedflation" Concerns – Amid economic pressures, President Biden points to grocery sector pricing practices as exacerbating inflation, with a notable 20% increase in grocery prices since the pandemic began.

New Car Trends: Domestic vs. Import

• USA's Overflow – Dodge takes the trophy for the most stocked brand, with its compatriots Chrysler, Lincoln, and Ram not far behind.
• Asia's Exclusive Club – Toyota's playing hard to get with a mere 36-day supply, followed closely by Honda, Lexus, and Mazda.‍
• Price Trends – The average new-vehicle listing price was $47,142 in early February, marking a 1% decline from the previous year, while the average transaction price was $47,401, down nearly 4%.

We Can’t Get No Satisfaction

For the first time in over two decades, less than half of Americans report being "very satisfied" with their personal lives, marking a slight decline from the previous year and hovering just above the record low set in 2011.

• Everyone’s Feeling Pretty Meh – While majorities across all demographics feel at least somewhat satisfied, the "very satisfied" contingent has shrunk.
• Key Happy Demographics – High-income households, married adults, regular religious attendees, college graduates, Democrats, and those 55+ report higher levels of satisfaction.

So, if you want to be happier, just get married, make more money, and be older - easy peasy!

Auto Credit Blues

January witnessed a tightening in auto credit access, as reported by the Dealertrack Credit Availability Index, with the All-Loans Index experiencing a 3% decrease from the previous year. 

• Historical Highs – Down payments have hit their highest recorded level, indicating increased financial burdens on buyers.
• New vs. Used – New-vehicle loans and bank lending saw the most tightening, while used-vehicle loans through independent dealers and loans from auto finance companies were relatively less impacted.
• Delinquencies and Defaults – Auto loans that were delinquent by 60 days or more increased for the ninth month in a row and were up 7.9% from a year ago. Defaults increased by 2% in total in January from December and were up 17% YOY.

The Super Bowl’s Effect on EVs

The Super Bowl this year marked a significant spike in interest for EVs with certain ads particularly electrifying viewer curiosity. 

• Interest Spike – EV traffic on Kelley Blue Book surged by 223% on game night, outpacing hybrids and highlighting a growing consumer shift towards electric SUVs.
• EV Ad Highlights – Kia's EV9 and Volkswagen's ID.Buzz emerged as the MVPs in boosting brand and model interest.
• Overall Brand Lifts – Volkswagen, Kia, BMW, and Toyota saw significant upticks in shopper interest and research volumes.

Everyone always wants to clown on the staggering cost of a Super Bowl commercial, but the return on investment is pretty clear. Who wants to help us raise up for a spot next year??