Government shutdown and the auto industry

Government shutdown and the auto industry

It has been hard to gauge the effect of the government shutdown and civil servant furloughs on the auto industry. Part of the difficulty is that the information engines which measure the economy are in government agencies that were shutdown rendering the information unavailable.

The industry could adjust to a couple of weeks without recall notices from the National Highway Traffic Safety Administration or Monroney stickers for new cars that are based on information from EPA mileage tests that are on hold. But because of the prolonged period without the mileage tests, things like new-model launches were subject to set back since a new car cant be sold without a Monroney sticker.

More broadly, the effect of the shutdown could derail the momentum the industry has built over the past couple of years, LMC Automotives vice president of vehicle forecasting Jeff Schuster told the Detroit News. GMs vice president of U.S. sales Kurt McNeil told the paper that the two week shutdown could hurt consumer sentiment.

Edmunds.com Chief Economist Lacey Plache is more optimistic. Well probably see some hit to sales this month, but well probably see a strong finish to the year, she told the Detroit News.

All of that analysis is for nationwide auto sales. The effect of the shutdown on Washington area auto sales and service could be a cause for additional concern. But because civil servants will be paid retroactively, Plaches positive national outlook may apply here, too, since furloughed employees may simply put off planned auto purchases as opposed to foregoing them all together.

The side effect of furloughed government contract employees is less clear. It doesnt look as if these people will be paid for missed time, and some may be laid off permanently. Indeed, there are a great many contract employees in the Washington area. More than one-third of jobs in Fairfax County, for instance, are held by people working directly for the government or for government contractors.

An unsurprising effect of the Congressional gridlock that brought on the shutdown: Americans now give Congress an 8 percent approval rating in a survey by the Public Policy Polling Institute. Even worse, they rate members of Congress, all of them, lower than hemorrhoids. Only New Yorks mayoral candidate Anthony Weiner and riskå celebrity Miley Cyrus get lower ratings.