Economic Slowdown
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Economic Slowdown: Housing Woes, Mixed Consumer Sentiment

Auto Market Weekly Summary

Highlights

  • GDP and Personal Income Growth: Both have slowed, with consumer spending also decreasing.
  • Housing Market: Remains challenging as pending home sales continue to fall across all regions.
  • Consumer Confidence and Sentiment: Mixed signals, with some optimism due to decreasing gas prices.

GDP, Personal Income, and Spending

  • Fourth-Quarter Real GDP Growth: Revised down to 1.3% annualized from 1.6%. Year-over-year growth revised to 2.9% from 3.0%.
  • Personal Consumption: Adjusted to a 2.0% increase from 2.5%.

Personal Income:

  • Growth decelerated to 0.3% from 0.5% in March.
  • Employee compensation growth slowed to 0.2% from 0.6%.
  • Government transfer payments growth decelerated to 0.3% from 0.8%, with reductions in Medicaid, Social Security, and unemployment compensation.
  • Proprietors’ income: No change after a 0.2% gain in March.
  • Interest and dividend income: Both saw increases.

Spending Breakdown:

  • Goods: Spending declined by 0.2% in April after a 1.1% gain in March. Durable goods spending fell 0.2% following a 0.3% growth in March. Nondurable goods spending declined 0.1% in April after a 1.5% increase in March. Motor vehicles and parts spending grew 0.8% following a 1.5% decline in March.
  • Services: Spending growth revised down to 3.9% from 4.0% in April. Growth decelerated to 0.4% from 0.6% in March.

Savings Rate and Inflation:

  • The savings rate remained at 3.6%, with March revisions raising it from 3.2%.
  • Personal Consumption Expenditure Index: Increased by 0.3%, consistent with March.
  • Price Inflation: Overall remained at 2.7% year over year; core inflation steady at 2.8%.

Pending Home Sales

  • Dropped 7.7% in April, more than the expected 1.0% decline.
  • Year-over-year decline of 7.7%.
  • Regional declines: Midwest (down 9.5% in April and 8.7% year over year), Northeast (down 3.5% in April and 3.1% year over year).

Consumer Confidence, Sentiment, and Gas Prices

  • Consumer Confidence: Increased by 4.6% in May due to improvements in present and future outlooks. Still down 0.5% year over year. Vehicle purchase plans unchanged.
  • Consumer Sentiment:
    • Morning Consult: Volatile in May, with a 2.1% decline for the month but up 6.9% year over year.
    • University of Michigan Sentiment Index: Declined 10.5% in May but up 17.1% year over year. Median inflation expectation for one year rose to 3.3%, the highest since November. Five-year expectations steady at 3.0%.
  • Gas Prices: Declined in May, potentially boosting June sentiment. National average for unleaded gas decreased by 2.8% from the end of April to $3.56 per gallon as of May 30, unchanged year over year.

 

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