Summary of Auto Sales and Credit Supply

Federal Reserve Board,

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Auto Sales and Credit Supply summary
When the US economy catches a cold, auto sales wind up in the emergency room.

Rating

8 Overall

7 Importance

9 Innovation

7 Style

Recommendation

When the US economy catches a cold, car sales end up in the emergency room. Recessions are especially tough on auto sales, which typically correlate to credit availability, interest rates and consumer economic sentiment. That may seem obvious, given the auto sector’s impact on the US economy, but this report from Federal Reserve economists Kathleen W. Johnson, Karen M. Pence and Daniel J. Vine offers an intriguingly nuanced look into car buyers’ decision making under various economic conditions. getAbstract recommends this scholarly report to investors and economists seeking insight into the psychology and economics of auto sales.

In this summary, you will learn

  • How the 2007–2009 recession affected auto sales and auto loans
  • How factors such as credit scores, education and homeownership affect car-buying habits
 

Summary

Car sales are especially sensitive to economic conditions, and demand for autos – or lack thereof – plays an outsized role in economic downturns. Motor vehicle sales make up only one-third of durable goods consumption, but in a typical recession, falling auto purchases explain nearly two-thirds of the...
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About the Authors

Kathleen W. Johnson, Karen M. Pence and Daniel J. Vine are Federal Reserve economists.


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