New Car Sales:
In Automotive, the big headline grabber is always new car sales. While the new car market has never been a perfect prognosticator for salvage value, it’s too big to ignore. A strong top-to-bottom car market is good for business. A weakened new car market is not only rough on retained value models but is bad news for the economy. After years of record unit sales, the last two years have fallen off. As we approach a new decade we may be facing a significant long-term slowdown in demand for new product related to a change in demand.
As mentioned in the opening this has been a roller coaster ride, assumptions about easy fixes or trade deals aren’t likely to play out. We expect even with some type of trade cease fire, the market is going to stay down.
Trade conversations (continued):
This is the most opaque and difficult to predict element of all current economic forecasts. It seems like the twin drivers of low unemployment and strong consumer confidence seems to be the boat that pulls the U.S. economy on water skis. Yet these two forces can’t ignore the other signs of stress. Globally, a world economic slowdown is a growing concern. For most of the last 20 years, the prevailing suspicion was: the world was drafting China’s economic wake and the emerging giant was a good sign of things to come. However, China is now wrestling with their own recession, dwindling job markets, and a serious health threat with the coronavirus. Bad news in China can translate to the rest of the world.
Everyone agrees that the economic stakes are very high right now. No candidate wants to have the end of the longest sustained economic growth in American history on their hands. However, the coming election will certainly include lively conversations about trade strategy, borrowing, credit markets, globalization, and military objectives. These conversations in advance of the election will possibly cause some market unrest…. It’s unavoidable and ill timed.