Low interest, improved housing, low gas prices drive auto sales
Strong auto sales in the second half of 2012 will help boost 2013 sales to 15.4 million, says R.L. Polk & Co., a forecast thats 100,000 units higher than just two weeks earlier. No one would hold an economist to his January forecast down to the decimal point, but the trend is clearly up. Here are some factors likely to help sales:
Low interest rates. The Fed has promised to keep rates low until the unemployment rate falls to 6.5 percent, says Polk a rare move showing the agencys commitment to bringing down the jobless rate.
Improved housing market. NADA chief economist Paul Taylor has been tracking the correlation between auto sales and housing for several years, and the trends are improving for both. The index of pending home sales rose nearly 10 percent in November, and mortgage rates are at their lowest level in 60 years.
Low gas prices. Gas prices influence the mix of vehicles sold.
The fiscal cliff problem is resolved for now. But as everyone in the Washington area knows, the size of the federal budget and the debt ceiling are not. Another round of budget and economic uncertainty could be a distraction for would-be car buyers.
On the downside, continued high unemployment and a very modest GDP growth rate are tailwinds that could be a drag on auto sales and other economic sectors.
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