Declining Car Sales

Last week, Federal Reserve Chairman Jay Powell delivered a hawkish speech at the Jackson Hole Economic Symposium. Specifically, he pointed out that inflation remains much too high and that we should expect the Fed to keep rates elevated for an extended period of time. This resulted in a market sell-off and also indicates that the Fed will not turn dovish anytime soon. This week, we will receive the August employment report. The consensus expects non-farm payrolls to come in at 300,000 and for the unemployment rate to remain unchanged at 3.5%. If the consensus is correct, the labor market remains relatively strong despite the Fed’s efforts to cool the economy down to combat high inflation. However, the economy is starting to show some cracks, for example in interest-rate sensitive components of GDP like housing and auto sales. In this edition of the Weekly Brief, we take a closer look at the University of Michigan’s survey of buying conditions for US vehicles, which shows a significant decline in the months ahead.

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