U.S. light vehicle sales are likely to remain low until this summer. A rebound is expected to bring volume for the year to 15.7 million units, according to the National Automobile Dealers Association. (Light vehicles sold at an annualized rate of only 15.2 million in January).
Last year’s sales were 16.15 million, and other forecasts for this year range from 15.5 million to 16 million.
NADA economist Paul Taylor predicts that the high cost of gasoline and heating fuel will continue to drain household budgets and put a damper on consumer spending despite the federal government’s $168 billion economic stimulus package. He expects unemployment to peak at 5.3% this year; it was 4.9% in January.
Taylor expects credit troubles to linger through the first half of 2008 in spite of interest rate cuts from the Federal Reserve. The housing market in about half the country will probably remain weak into next year, he adds.