With Incomes Flat, Can Auto Sales Grow?

Good News, Everyone!

New-car registrations, a proxy for sales, fell 8.7 percent from January 2012, the European Automobile Manufacturers’ Association reported in Brussels, falling to 885,159 units, the lowest level since the organization records began in 1990.

Global automakers are hoping for a decent 2013, but they worry that the European market will continue to decline.

That’s what we want, isn’t it? We want other people to drive less, pollute less – use public transportation, bicycles, even walk a bit. And these are Europeans, so they’re definitely other people.

… Consumers have been slammed by recession, unemployment and government austerity measures. In many countries with good public transportation, driving is a pleasure rather than a necessity, and high joblessness among young people has the industry fretting that an entire generation will not adopt the car lifestyle.

Better and better. So why doesn’t it seem like good news?

The United States, in comparison, has gotten off to a fairly strong start this year, with sales having gained 14 percent in January from the same month in 2012. Emerging markets are also expected to post good growth.

Actually US auto makers have been just as worried that young people stateside are not flocking to buy cars. Considering the recent rise in fuel prices, the proliferation of traffic cams, and the cost of cars themselves – I don’t blame people for staying home or jumping on a bike. In many places cars are the only option, but with, Incomes Flat in Recovery, but Not for the 1%, one might anticipate that personal autos could be headed towards being a luxury once again.

Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data.

The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent. …

The disparity between top earners and everybody else can be attributed, in part, to differences in how the two groups make their money. The wealthy have benefited from a four-year boom in the stock market, while high rates of unemployment have continued to hold down the income of wage earners.

“We have in the middle basically three decades of problems compounded by high unemployment,” said Lawrence Mishel of the Economic Policy Institute, a left-of-center research group in Washington. “That high unemployment we know depresses wage growth throughout the wage scale, but more so for the bottom than the middle and the middle than the top.” … In his analysis, Mr. Saez said he saw no reason that the trend would reverse for 2012, …

After accounting for inflation, median family income has declined over the last two years. In 2011, it stagnated for the poorest and dropped for those in the middle of the income distribution, census data show. Median household income, which was $50,054 in 2011, is about 9 percent lower than it was in 1999, after accounting for inflation.


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