Used Car News

The ability of the used-car business and the overall U.S. economy to continue recovering hinges on employment.

The latest employment numbers caused some reason for hope. While the country shed 216,000 jobs and the unemployment rate rose to 9.7 percent, economic optimists pointed out the rate of job losses had slowed.
“Although many have predicted that unemployment might reach 10 percent or more, a possible slowing in job losses may help the economy avert that undesirable outcome,” said Tom Kontos, ADESA’s executive vice president of industry analysis, in the summary of Pulse, his mid-year economic report.
Economists point out that it takes growth of 150,000 jobs per month just to maintain employment rates and growth of more than 200,000 jobs per month to lower overall unemployment.
The National Employment Law Project reports hundreds of thousands of people will see their benefits expire.
Tom Webb, Manheim’s chief economist, said there’s potential for a sudden spurt of employment in the next few months. But he said the number of workers with involuntary reduced hours is so high that companies may shift employees back to full-time before they start hiring again.
“Those people normally don’t hire until they see the whites of the eyes of a recovery,” Webb said.
Any improvement should help the overall economy. Kontos said employment is often a lagging indicator of recovery.
Wholesale prices continue rising as available inventories shrink.
The Manheim Used Vehicle Value Index for August was 116.4, an increase of 5.1 percent from a year ago and the eighth straight monthly increase.
But if employment fails to improve, maintaining retail demand could prove challenging.
Worse, it could create a “W-shaped” recession some experts are warning of.