A recent report from the St. Louis Federal Reserve highlights that automotive sales continue to be one of the most encouraging aspects of an otherwise sluggish economic recovery. The report notes that “most analysts regard increases in automobile and light truck sales as an important component of an economic recovery.” And ever since the recession and the government rescue of the automakers, the industry has been on a steady upward climb:
During the first six months of 2012, the annual sales rate for automobiles and light trucks was 14.8 percent higher than during the comparable year-earlier period… Most recently, however, slower vehicle sales have mirrored the generally slowing pace of U.S. economic activity, with the July sales rate less than June’s… Yet, July sales of 1.15 million vehicles were 8.9 percent better than the same month in 2011.
August was even better, with sales topping 1.2 million, making it the best August for auto sales since before the recession. And the rebound would not have been possible without the bridge loans provided by the government in 2009.
Numerous industry insiders agree that Mitt Romney’s alternative proposal for private markets to provide necessary capital to complete the bankruptcy process is wildly implausible. The economy was still reeling from the recession, and sources of private capital were in no position to provide that kind of aid. Without government intervention, there would’ve likely been a massive liquidation of the industry, wiping out as many as 1.3 million jobs.
Obama administration policies have helped in other ways as well: New fuel efficiency standards and incentives in the 2009 stimulus are driving American-made cars to be become more competitive in an international market adapting to higher fuel prices.