Today numbers show that the recovery is ‘softer’ than thought. And it’s not surprising why. In fact, I predict it will ‘soften’ yet again in two months. Why do I predict so?
1. Cash for clunkers ends – and the ‘recovery’ for automakers ends.
Shock and awe – when the cash for clunkers program ended – all of a sudden people stopped buying cars and that auto ‘recovery’ seems to have stopped. Well DUH! It wasn’t really a recovery ANYWAY. it was an artificial recovery. Yet people seem surprised that folks stopped buying new cars after it ended and are punishing their stocks. Who honestly didn’t see that’s what would happen.
2. 6 out of 10 top selling cash for clunkers cars were not American – so your tax dollars just helped foreign automakers as opposed to domestic stimulus. Here’s the list of top 10 cars sold through the program:
Ford Focus, Toyota Corolla, Honda Civic, Toyota Prius, Toyota Camry, Ford Escape, Hyundai Elantra, Dodge Caliber, Honda Fit, Chevy Cobalt
3. Housing is in a ‘soft’ recovery right now
Here’s my prediction portion. Yes, home sales have had nicely improving numbers for the last several months of sales. But that will stop Dec 1, 2009 when the cut-off for the $8000 first-time buyer program ends. Then, probably just like the cash for clunkers – we’ll see slowing sales again and that ‘recovery’ will go soft – and will probably ‘shock’ experts just like the slowing auto ‘recovery’ did. With unemployment continuing to rise, and along with that the number of forclosures continuing to rise, it’s foolish to think the rising house sales trend will continue. Oh, it won’t crash, but don’t expect a roaring recovery when there aren’t new jobs so people can pay those mortgages.