November U.S. light vehicle sales were 2.8% higher than last year. Sounds good, until you take a closer look.
For one thing, November 2005 vehicle sales were themselves pretty bad. The downturn in motor vehicles and parts last year was enough all by itself to contribute -1.5% to total 2005:Q4 U.S. GDP growth. October and November 2006 U.S. vehicle sales may be up relative to 2005, but were still below the values for those months in 2004 or 2003.
Moreover, what matters for generating U.S. income and employment is not total sales but rather sales of those vehicles that are manufactured in the U.S. Motor vehicles and parts shed another 20,000 manufacturing jobs in October, and sales of U.S.-manufactured cars for both October and November 2006 were the lowest value of the last three years.
Domestic light truck sales, Detroit’s key money-maker, did improve slightly relative to the very weak 2005 levels. But they’re also substantially down from 2003 and 2004.
All of this would not be that big a deal in terms of the effect on total GDP, if the rest of the economy were doing ok.
That’s a great line. I’m just worried that we seem to have already used it to explain why the housing downturn is not that critical, either.