Jim Hamilton on Auto Sales

Jim Hamilton analyzes the auto industry. His first and last words, with all the graphs and analysis in between omitted, are:

Auto sales down in April, by James Hamilton: The number of new cars and light trucks sold in America was down nearly 8% in April relative to the previous year. That's a significant deterioration of the recent downward trend, but not yet a catastrophic plunge. ...

I conclude that so far this is not looking like a replay of the very sharp drop in domestic auto sales that we saw in the fall of 2005, which ... shaved a full 1% off 2005:Q4 GDP growth. Although rising gas prices may have been a factor in the April sluggishness, I agree with Kash Mansori that the current data are more likely to be an early signal that slowing income growth and a perhaps a reduction in mortgage equity withdrawal are starting to show up in consumption spending.

So far, the magnitudes are ones we can live with. And it's always a mistake to make too much of one month's data. But the April vehicle sales certainly raise the level of concern.