With auto sales coming in exceptionally weak in the retail sales report today and given the importance of the auto sector in an otherwise awful economy, it makes sense to go further in detail to try to tease out corroboration. The Bureau of Economic Analysis provides a wealth of supplementary data on motor vehicles that it uses to construct GDP. It gives us a breakdown across vehicle segments, as well as domestic vs. imports.
Since the dollar figures prominently in everything over the past two years, we should be able to find a couple of expected effects related to its ‘rise.’ The first is any oil price follow-through, as consumers should have been further attracted via the advertised savings in gasoline. The second is the traditional idea of the import effect via the ‘strong’ dollar. In other words, as the exchange rate rises, absent any changes in overall demand, the mix of US auto sales should distinctly favor imports.
There is evidence for both of those within the BEA figures, but only in narrow circumstances. As to the first, sales of automobiles have been declining since August 2014 in favor of light trucks. That might be due to gasoline prices, although it may also be an income effect as trucks are typically more expensive, on average, than passenger cars. This level of analysis, however, only gives us unit figures which are a companion to the retail sales numbers from earlier.
This post was published at David Stockmans Contra Corner by Jeffrey P. Snider via August 13, 2016.
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