US Auto Sales to Boom in 2002

Charlie Nelson
Managing Director, foreseechange (www.foreseechange.com)
April 2001

Our forecasting model of US auto sales incorporates the impact of employment growth, interest rate movements, and vehicle prices. Both interest rates and employment growth have a lagged impact on consumer spending because:

When rates are rising, households with debt try to maintain spending power for as long as possible – running down savings or going further into debt;
When rates are falling, households with debt initially tend to repair their financial situation before spending their extra money.

Essentially, consumers are habitual and take time to change habits. Firms have planning cycles for purchasing that also lag movements in interest rates and employment decisions.

Sales have slowed over the past few months as a lagged reaction to interest rate increases in late 1999 and early 2000. However, the recent very rapid rate cuts will cause a boom in auto sales in 2002. We are forecasting record sales - in excess of 18 million.

Our forecast bulletins also include sensitivity analysis to variations in assumptions about future movements in interest rates, employment, and auto prices

Our forecasts will be updated quarterly. Annual subscription is $200 (U.S. dollars).

Please complete the form below if you wish to subscribe. We will send you our invoice for $200 along with your first forecast update (quarterly forecasts to Dec. 2002).

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