Monday, April 16, 2012


The worries began as soon as the economic news was released.  After three months of strong economic growth, the March figures just recently announced were a major disappointment.  The gain in March was a modest 120,000 jobs, half of what the gains were from December through February.  And of course as soon as the statistics were announced, both the economic doubters as well as the political opponents of the Obama administration began to question the strength of the recovery. For me, one month of bad news doesn’t represent the start of a new recession just as one month of good news doesn’t represent a vibrant recovery.  The economic situation we are in will be clearer over time.  And given how interconnected many economies are, the result may not entirely be of our doing.

I have my own economic barometer.  My hypothesis has not been tested (at least not by me) but I believe the results are accurate.  I believe that attendance at a major automobile show, as well as where the attendees congregate at the show, is a leading indicator of economic expansion.  I attended the New York auto show this year on the first day it was open to the public.  It was a beautiful day and the show was extremely well attended.  If you go back to the 2009 or 2010, the contrast was extremely noticeable.  In those days, there were according to my observation fewer couples, fewer kids and smaller exhibits.  This year the couples were plentiful, the kids were plentiful, and the cars were plentiful.  And what mattered even more to me, is that the cars being looked at were not just the dream cars that are affordable by very few but the bread and butter cars that help determine how many cars are manufactured and sold on an annual basis.

Almost every manufacturer (and especially every US manufacturer) had desirable new cars available or on the near horizon.  Seeing a new Chevrolet Malibu or a Cadillac ATS, a new Dodge Dart or Chrysler 300, or a Lincoln MKZ or a Ford Escape were  just a few of the many signs of American manufacturers responding to the need of the public.  Foreign manufacturers were equally impressive in their lineup of cars including, to make sure we have additional highly desirable choices, the South Korean manufacturers (Hyundai and Kia).  And yes, in looking for a new car for me or my spouse, we would now also consider a Hyundai or a Kia. The diversity of the lineups was also noteworthy.  No lack of sedans, SUVs, crossover vehicles, all-wheel drive vehicles, hybrid vehicles, small vehicles, larger vehicles, faster vehicles, and more economical vehicles.  The automobile industry to its credit and to the credit of our government is back as a positive key factor in our economy.

Economics, as I have indicated before, has a significant psychological component.  Automobile manufacturers producing cars that appeal to the public stimulate additional car sales.  These car sales in turn lead to higher profits and, most likely, additional investments by the industry.  This leads to more jobs and more discretionary income. And the end result as this process continues is a more robust economy.  Based on my caronomics analysis, the economy is doing better than the recent job statistics suggest.  Our government bailed out GM and Chrysler; nice to see that they (as well as Ford, etc.) are now returning the favor by moving our economy forward.

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