Here’s James D. Hamilton’s take on the dismal numbers for November auto sales.
The auto downturn is very serious
Courtesy of James D. Hamilton, at Econbrowser
I was running out of vocabulary last month to describe just how bad October was for the domestic automakers. But whatever you want to say about October, November was significantly worse.
When I first saw the figure for November sales of cars manufactured in North America– 236,000 units– I thought maybe somebody had mistyped the first digit. Even 336,000 would have been a very bad month. But 236,000 is 17% below the dreadful October figure and 40% below the number sold in November of 2007.
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Sales of domestic light trucks were down 10% from October and down 37% from November 2007.
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Remember that this volume decline is hitting an industry with huge fixed costs, and that these are decreases relative to 2007. GM, for example, reported a loss of $38.7 billion for 2007. That’s billion, with a "b". Back when things were good.
I believe that lost income and jobs in the auto sector tipped the U.S. economy into recession this summer, and we may be on the cusp of much more dramatic adjustments in this sector than anything seen so far. The wrenching changes that might be immediately ahead could mark the beginning of a frightening new phase in the economic downturn.
