Wednesday August 23, 2006

Car-sales indicator suggests recession is near or already here

peakoil.com -> nytimes.com :

If things are miserable for America's new-car dealers, can a recession be averted? History says it cannot and suggests a downturn may have already begun. Using the year-on-year rate of change in sales by new-car dealers, the rule - unveiled here for the first time - is that if the figure is down 2% or more, a recession is either under way or set to begin within a few months. The figure fell to -2.4% for June sales figures. The "dealer doldrums indicator" called five of the six recessions going back to 1968. It has never warned of a recession that did not occur.

No indicator is perfect, of course, and this one was developed knowing when the earlier recessions had occurred. But it makes sense because there are often cheaper alternatives to new-car dealers, whether for service or for buying used cars. So such dealers are likely to lose market share when times turn bad, pinched as they are by the slumping real estate market and soaring gasoline prices. Dealers are hurting. The rest of us may soon share their pain.

See also :

1. All signs point to an economic slowdown
2. Housing dream fades at petrol pump

(2006-08-23 12:57:25 SGT) [Biz] Permalink

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