Auto sales data released today look just great, as long as your name is Toyota.
The W$J reports that Toyota sold 12% more vehicles in December 2006 compared with December 2005, while GM and Ford were both down 13%. That’s an acceleration of a long-run trend which is going to make an unfavorable contribution to our current short-run problem of keeping U.S. GDP growth positive. Long-term issues aside, what matters for short-run GDP and employment is cars made in the U.S.
Sales of domestically manufactured cars were down 0.6% from December 2005. That’s enough to give 2006 the worst fourth-quarter performance for domestic car sales of the last four years.
Domestic light trucks, the key money-maker for Detroit, plunged 13.2% from December 2005:
And don’t forget how bad those 2005 numbers were with respect to which we’re making the comparison: motor vehicles and parts all by themselves contributed -1.5% to the 2005:Q4 reported real GDP growth rate, (see BEA Table 1.5.2), so last year’s sales are a depressingly low hurdle to fall below. The Michigan Business Activity Index compiled by Comerica Bank is now at its lowest level since the recession of 2001.
I still believe that the most likely outcome is for U.S. GDP growth to remain positive. But the prediction for the first half of 2007 of 2.5% GDP growth from the median W$J forecaster (discussed also by Macroblog and the Big Picture) strikes me as overoptimistic.