Good News for Auto Makers
Earlier this year, Cash for Clunkers provided a much needed boost in automobile sales. It was a huge success for auto makers, and ran out of money faster than anyone had predicted. Now that the program has ended, auto makers will have to hope for economic success to see their car sales increase. Fortunately, economists are optimistic for the economic future. Some are even claiming that the "Great Recession" has come to an end. This is good news for car makers, who are hoping that this will cause an increase in car sales for 2010.
Why Economists are Optimistic
Since the economic crisis began, consumers have started to save more and spend less. People are still upset over losing wealth in the stock market and equity in their homes. Unemployment has left some families with less money to spend. However, spending did rise by .02% in July, and it is expected that spending will increase by 2% in 2010. Some of this money is likely to end up in the hands of auto makers and dealerships.
The housing and construction markets look a little bit brighter for 2010 as well. Existing home sales are rising, and although prices are still falling a little, economists are expecting for prices to begin to rise in the spring of 2010. Construction spending, after taking a huge hit in the past year, is expected to rise as well. The construction of new homes, is expected to rise next year. Highways and other building projects are getting a construction boost as well, partially due to the economic stimulus package. Higher prices for homes and more work for construction workers could have a positive impact on auto sales, as these affect the finances of ordinary Americans, including many that have cut back on their spending in the past year or two.
Energy prices should remain low throughout 2010, while factories see an increase in production. Cash for clunkers depleted the supplies of automobiles, car parts, and raw materials to make these items, and factories are ramping up production to replace its supplies. In August, industrial production saw its first increase since December of 2007. As long as consumer demand increases, the factories will be able to continue its output, and American workers will be able to continue to work in these factories. With low energy prices, less of their money will end up going to pay for driving and transportation costs, and they will have more money to spend in other places. This could also have a positive effect on car sales.
No Crystal Ball, but Things Look Good
Although there is no way to know for sure what the future will hold, many economists are looking optimistically towards the future, and expect to see growth in many areas in 2010. As long as there are no surprises from abroad, the trends in energy prices, housing, construction, factory output, and spending look good. As a result, car manufacturers and dealers could have a rosy new year.