Auto ECON Updates

Auto ECON Updates (56)

Real gross domestic product increased at an annual rate of 2.9 percent in the third quarter of 2022, according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.6 percent.

The GDP estimate released Nov. 30 is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. The second estimate primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased more than previously estimated.

The increase in real GDP reflected increases in exports, consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending, that were partly offset by decreases in residential fixed investment and private inventory investment. Imports decreased.

The increase in exports reflected increases in both goods and services. Within exports of goods, the leading contributors to the increase were industrial supplies and materials (notably nondurable goods), “other” exports of goods, and nonautomotive capital goods. Within exports of services, the increase was led by travel and “other” business services (mainly financial services)

Real GDP turned up in the third quarter, increasing 2.9 percent after decreasing 0.6 percent in the second quarter. The upturn primarily reflected a smaller decrease in private inventory investment, an acceleration in nonresidential fixed investment, and upturns in federal as well as state and local government spending that were partly offset by a larger decrease in residential fixed investment and a deceleration in consumer spending. Imports turned down.

In the week ending Nov. 19, the advance figure for seasonally adjusted initial unemployment claims was 240,000, an increase of 17,000 from the previous week’s revised level. The previous week was revised up by 1,000 from 222,000 to 223,000. The 4-week moving average was 226,750, an increase of 5,500 from the previous week’s revised average.

The previous week’s average was revised up by 250 from 221,000 to 221,250. The advance seasonally adjusted insured unemployment rate was 1.1 percent for the week ending Nov. 12, an increase of 0.1 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending Nov. 12 was 1,551,000, an increase of 48,000 from the previous week’s revised level. The previous week’s level was revised down by 4,000 from 1,507,000 to 1,503,000. The 4-week moving average was 1,509,750, an increase of 28,250 from the previous week’s unrevised average of 1,481,500.

People are scaling back their spending habits and changing attitudes toward saving and borrowing after a year and a half of high inflation, according to a report from the University of Michigan’s Surveys of Consumers.

Consumer sentiment this summer was at an all-time low. By October 2022, year-ahead inflation expectations were 5% and long-run expectations were 2.9%. Both measures are considerably elevated and remain above the Federal Reserve’s target of 2% inflation, according to Joanne Hsu, a director at the U-M Institute for Social Research.

To form this special report, the U-M surveys asked consumers about current and future changes in their attitudes and spending in August, September and October of this year.

“Throughout 2022, consumers have expressed how inflation has eroded their living standards, closely tracking the proliferation of negative news they hear about inflation,” Hsu said. “We can now see the effects on behavior as well: a majority of consumers have adjusted to their expectation of continued inflation by adjusting their spending.”

Some questions asked of consumers were also collected in 1979 and 1981, providing some historical context, though by then consumers had already adjusted to a decade of high inflation, Hsu said.

Specifically, the special report found:

  • About 60% of consumers have already scaled back their spending in response to inflation, and even more consumers plan spending cuts in the year ahead.
  • Consumers are more reluctant to borrow for major purchases than to dissave, which suggests that consumers may pull back their spending even more as they draw down their savings.
  • Advance buying motives—a component of inflationary psychology in which consumers make large purchases no in order to avoid price increases in the future—do not yet appear to be widespread but are favored by a sizable minority of consumers and remain a risk for the future.
  • Consumers report more awareness of news on inflation than in the 1970s, which may influence their attitudes.

Hyundai Hope, the corporate social responsibility initiative of Hyundai Motor America, announced its partnership with Children’s Hospital of Philadelphia, donating $50,000 to support its Car Seat Safety Program. This donation will allow the hospital to give almost 700 car seats to families in need, helping to ensure the safety and well-being of their children while on the road.

“We are thrilled to partner with an esteemed institution like Children’s Hospital of Philadelphia on such an important cause,” said Brian Latouf, global chief safety officer, Hyundai Motor Co.

To kick off this partnership, Hyundai and Children’s Hospital of Philadelphia hosted a car seat safety check event for the community at Faulkner Hyundai in October. At the event, families spoke with certified child passenger safety technicians to ensure the proper installation and usage of their children’s car seats. These technicians also inspected car seats for expiration, manufacturer recalls, and/or proper fit of the seat. Families also received a free replacement car seat if needed.

In the week ending Nov. 12, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 225,000 to 226,000. The 4-week moving average was 221,000, an increase of 2,000 from the previous week's revised average. The previous week's average was revised up by 250 from 218,750 to 219,000.

The advance seasonally adjusted insured unemployment rate was 1.0 percent for the week ending Nov. 5, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending Nov. 5 was 1,507,000, an increase of 13,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 1,493,000 to 1,494,000. The 4-week moving average was 1,481,500, an increase of 31,000 from the previous week's revised average. The previous week's average was revised up by 250 from 1,450,250 to 1,450,500.

The third quarter of 2022 saw more consumers turning to unsecured personal loans and credit cards as a means to help stave off the financial pressures brought on by inflation. TransUnion’s newly released Q3 2022 Quarterly Credit Industry Insights Report also shows that while delinquencies for most credit products remain in line with pre-pandemic levels, they continue to rise from the very low levels seen in 2021, particularly among subprime segments of customers. 

“Delinquencies remain in line with historical levels for most credit products,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion. “However, levels have been rising over the past year, particularly among subprime consumer segments, and should be monitored in the coming months to look for similar increases in other credit risk tiers.”

Credit card balances continue to grow, with bankcard balances reaching a record high of $866 billion in Q3 2022, which represents a year-over-year (YoY) increase of 19%. This increase was heavily driven by growth among Gen Z and Millennial borrowers, among whom balances grew by 72% and 32%, respectively. Private label balances are also at a record high, up 7.3% YoY. Private label total and average credit lines have also increased to record highs, as have average number of accounts per consumer.

Delinquencies have also risen and in Q3 2022 were slightly higher than the level seen pre-pandemic in Q3 2019. Bankcard charge-offs, for now, continued to decline, down for the sixth consecutive quarter. Charge-off balances are showing an upward trend among private label after seven consecutive quarterly declines.

The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, revealed that consumer confidence has slipped to neutral. November’s Economic Optimism Index declined by 9.4% overall, putting it right at 50.0. For the IBD/TIPP indexes, a reading above 50 signals optimism and below 50.0 indicates pessimism. The index was in a strong position leading into November, thanks to its significant rise (22.7%) in October.

IBD/TIPP surveyed 1,324 adults from November 4 to November 6. Due to COVID-19, the poll was conducted online using TechnoMetrica’s network of online panels to provide the sample.

Financial stress increased by 2.6% in November. The Financial Related Stress Index moved from 65.0 last month to 66.7 this month. The reading continues to keep the index above 50.0. A reading over 50.0 equals more financial stress while a reading below 50.0 would indicate consumers feel less stress. This index has been above 50.0 since March.

NFIB’s Small-Business Optimism Index declined 0.8 points in October to 91.3, which is the 10th consecutive month below the 49-year average of 98.

Thirty-three percent of owners reported that inflation was their single most important problem in operating their business, three points higher than September’s numbers and four points lower than July’s highest reading since the fourth quarter of 1979.

“Owners continue to show a dismal view about future sales growth and business conditions, but are still looking to hire new workers,” said NFIB Chief Economist Bill Dunkelberg. “Inflation, supply chain disruptions, and labor shortages continue to limit the ability of many small businesses to meet the demand for their products and services.”

Key findings include:

  • Of the 10 Index components, two increased, seven declined, and one was unchanged.
  • Owners expecting better business conditions over the next six months deteriorated two points from September to a net negative 46%.
  • The net percent of owners raising average selling prices decreased one point to a net 50% (seasonally adjusted). Half of all firms are raising prices, that’s inflation.
  • The net percent of owners who expect real sales to be higher decreased three points from September to a net negative 13%.

As reported in NFIB’s monthly jobs report, 46% of owners reported job openings that were hard to fill, unchanged from September. Of those hiring or trying to hire, 90% of owners reported few or no qualified applicants for the positions they were trying to fill.

Fifty-four percent of owners reported capital outlays in the last six months, down two points from September. Of those making expenditures, 37% reported spending on new equipment, 22% acquired vehicles, and 17% improved or expanded facilities.

The Conference Board Employment Trends Index declined in October to 119.57, down from an upwardly revised 120.73 in September 2022. The ETI is a leading composite index for employment.

When the index increases, employment is likely to increase as well, and vice versa. Turning points in the index indicate that a turning point in the number of jobs is about to occur in the coming months.

“The ETI decreased in October 2022 and has been flat since early 2022, but it remains at a high level and a clear turning point in the Index is not yet visible,” said Frank Steemers, senior economist at The Conference Board.

“Therefore, job growth will likely continue over the next months, albeit at a slowing pace. Indeed, the labor market remains resilient with job gains still strong, but the Fed’s rapid monetary policy tightening is expected to have a more visibly negative impact on the pace of hiring by early 2023.

 “Until that happens, employers will have to deal with continued labor shortages. While there are signs these shortages have begun easing somewhat, hiring and retention difficulties are not over. A tight U.S. labor market, understaffing, limited recovery in labor force participation, and an aging workforce all suggest U.S. labor supply will remain a challenge for companies. As a result, employers may be more careful in laying off workers.

“Currently, we expect the U.S. economy to enter recession around yearend 2022, with the unemployment rate to rise to around 4.5 percent in 2023—roughly one percentage point higher than today, but still quite low compared to past downturns.”

Federal, state, and local law enforcement partners executed a nationwide takedown of leaders and associates of a network of thieves, dealers, and processors for their roles in stolen catalytic converters sold to a metal refinery for tens of millions of dollars.

Arrests, searches, and seizures took place in California, Oklahoma, Wyoming, Minnesota, New Jersey, New York, Nevada, North Carolina, and Virginia. In total, 21 individuals in five states have been arrested and/or charged for their roles in the conspiracy.

The 21 defendants are charged in two separate indictments that were unsealed today in the Eastern District of California and the Northern District of Oklahoma following extensive law enforcement arrest and search operations. In addition to the indictments, over 32 search warrants were executed, and law enforcement seized millions of dollars in assets, including homes, bank accounts, cash, and luxury vehicles.

“Amidst a rise in catalytic converter thefts across the country, the Justice Department has today carried out an operation arresting 21 defendants and executing 32 search warrants in a nation-wide takedown of a multimillion-dollar catalytic converter theft network,” said Attorney General Merrick B. Garland. “We will continue to work alongside our state and local partners to disrupt criminal conspiracies like this one that target the American people.”

“This national network of criminals hurt victims across the country,” said FBI Director Christopher Wray. “They made hundreds of millions of dollars in the process—on the backs of thousands of innocent car owners.”

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