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What’s Left To Drive The Recovery? Not Much

by John Rubino, Dollar Collapse:

US growth, such as it is, has lately been driven by a handful of hot sectors. Car sales have set records, high-end real estate is generally way up, and federal spending – based on last year’s jump in the national debt – is booming.

But now the private sector part of that equation is shifting into low gear. Cars in particular:

Economy Will Miss That New-Car Smell

(Wall Street Journal) – The annual pace of light-vehicle sales fell to a seasonally adjusted 17.2 million in the first quarter from 18 million. That the decline has come despite generous incentives from car companies and still-low gasoline prices suggests that sales are past their peak.

The upshot is that the deferred purchases that helped bolster business coming out of the recession have been made, and it will be up to replacement demand and a slowly growing population of registered drivers to fuel auto sales. If car makers are lucky, sales might stay on their recent level. If they aren’t—and the recent drop in used-car prices raises that prospect—the trend could be lower. In either case, autos might count as a negative for consumer spending and the industry, a big driver of economic growth, could be an outright drag on the economy for the first time since 2009.

GM Joins Ford Worrying About Declining Used-Car Prices

(Bloomberg) – General Motors Co. said a glut of used cars will return to market after their leases expire and drag on its finance unit this year, following similar warnings by peer Ford Motor Co. and lenders such as Ally Financial Inc.

The prices of used cars in GM Financial’s leasing portfolio will decline about 7 percent this year, GM Chief Financial Officer Chuck Stevens said on a conference call with analysts Thursday. The value of used GM vehicles have depreciated faster than expected in the first quarter, particularly with crossovers, and prices will fall as much as 3 percent next year.

Ford touched off concerns about declining used car prices late last year, when the automaker cut its lending unit’s profit forecast by $300 million. The National Automobile Dealers Association’s used vehicle price index plunged in February by the most since November 2008, spurring concerns about the fallout for automakers, lenders including Ally Financial and car-rental companies such as Hertz Global Holdings Inc.

Housing may be about to go the same way. Mortgage rates are rising, which means the real cost of owning a home — already up dramatically in the past few years — is about to jump again.

When rising prices meet soaring supply, carnage frequently ensues. Miami, as usual, is a case in point:

Miami Condo Bust Much Worse than Industry Numbers Show

(Wolf Street) – Condo sales in Miami-Dade County have plunged. Condos on the market have surged. Supply has hit 14 months. Developers are sitting on completed units they can’t sell, and months’ supply in their projects has reached several years.

Read More @ DollarCollapse.com

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2 comments to What’s Left To Drive The Recovery? Not Much

  • anon

    “What’s Left To Drive The Recovery? Not Much”?

    Right. It wasn’t a TRUE RECOVERY, in the first place. It was propped up by Ben Bernanke and the “Fed”, with BANKER BAILOUTS (2009), & QE (“Quantitative Easing”), which just served to prop up the “TBTF” (Too-Big-To-Fail) Banks, at taxpayer expense, and prop up the NYSE, also at taxpayer expense.

    So, what do the Bankers ALWAYS do, when their options for additional ways to suck blood from a stone are at an end? 1) START A WAR SOMEWHERE. 2) CREATE A DEPRESSION. 3) CREATE A FAUX “REVOLUTION”. 4) CREATE A FAMINE.

    The Path to Total Dictatorship: America’s Shadow Government & Its Silent Coup
    http://sgtreport.com/2017/04/the-path-to-total-dictatorship-americas-shadow-government-its-silent-coup/

    Read the comments. Follow the links.

  • anon

    I forgot to mention: 5) START A DOMESTIC CIVIL WAR SOMEWHERE.

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