One of the most exciting and bullish trends in the economy is the boom in car sales.
It’s really hard to imagine the economy slipping into any recession with the (fairly) steady month over month progress we’ve been seeing in this industry.
And as an indicator of public sentiment, it’s a great sign to see more nad more people plunking down big bucks on something.
But how much longer can it go on?
Maybe a lot longer.
Check out this interesting nugget from Jefferies analyst Peter Nesvold:
Auto Channel Check: Steel contact reports surging auto demand. We spoke with one of our contacts that sells flat rolled steel, among other metals, to the automotive sector. Our contact said that the nature of his business allows him to gauge end-market demand two quarters ahead and, as a result, he believes that the recent strength in the auto sector will continue through 2012. In fact, he noted that recent conversations with Tier 2 and 3 auto suppliers suggest that automotive-grade steel demand is “going gangbusters.” He added that demand from the auto sector continues to outpace U.S. GDP growth and is outperforming most of his other end markets. Our contact credited the increase in U.S. auto exports, to a favourable exchange rate, as opposed to groundbreaking design.
Between this and the steady improvement in new home sales, it’s just getting harder and harder to spin a bad tale about the economy.