Auto Market Weekly Summary
By Google News Motors ·
As chief economist at Cox Automotive, Jeremy Robb oversees the enterprise-level economic outlook, monthly forecasts, client advisory, media briefings and the strategic integration of data from the company’s extensive retail and wholesale platforms. Jeremy leads Cox Automotive's Economic and Industry Insights team, working directly with clients and executive leaders in sales, strategy and finance.
He draws on his background helping companies consume data and insights to make better business decisions. He has been focused on finance and strategy for large corporations in the financial services and automotive industry for the past 20 years. Jeremy joined Cox Automotive in 2018 after spending 6 years at Nissan where he led functions in finance and remarketing. He is based in Nashville, Tennessee.
The midterm elections brought sweeping change last week, and I had a front-row seat to the reaction at a national economics conference as the results came in. In this issue of the Auto Market Weekly Summary, we break down what it could mean for the economy and the auto market, along with updates on October new-vehicle sales, commercial vehicles and freight, and the October jobs report.
The midterm elections brought a blue tsunami the likes of which the United States hasn’t seen in decades, and with it, the likelihood of significant policy changes ahead. It will take time to discern exactly how it all plays out, with impacts on economic growth reverberating for the next several years. But some early direction is clear.
The results will almost assuredly put more emphasis on improving the relationships with both Canada and Mexico, which could create better opportunities for vehicle production and lessen the effects of tariffs, all of which would be welcomed by consumers. We also expect a more positive environment for clean and renewable energy, which in turn could spark more interest in electric vehicles.
At the same time, the macro data continues to support the Fed’s tightening bias. October payrolls rose 165,000, well above expectations, and positive revisions to both August and September lifted the three-month average much higher. Productivity also came in stronger than anticipated, and some economists believe recent growth is understated because the AI boom isn’t fully captured in measured economic activity.
If that’s true, then together with inflation running near 4% and a firmer job market, the Fed will likely resume raising rates to tame inflation. With the midterms in the rearview mirror, that path is now easier.
The macro view is perhaps the most important driver as we think about the auto sector in the coming months. Over the last several years, corporate profits have hit all-time highs, powering the stock market ever higher and supporting a strong wealth effect on consumer spending: a trend that has had an outsized impact on new-vehicle sales.
With Democrats now in charge of both the House and the Senate, and an election that served as a referendum on affordability, I would expect them to work to help consumers take back some share of those profits.
The economics of firms comes down to how capital and labor are allocated, and policy that tilts that balance toward individuals could slow corporate earnings growth, and with it, the wealth effect that has done so much of the heavy lifting, while potentially boosting labor earnings.
For the auto market, the crosscurrents are plentiful. Oil prices fell sharply last week on hopes of…
Originally published by Google News Motors
