Sales of autos and light trucks soared in February to a 15.1 million annual rate, up 6.5% from January and 13.7% from a year ago. The results easily beat the consensus expected a pace of 14 million and were the highest since early 2008.
Some of the surge was part of the recovery from last year's multiple disasters in Japan: imports were up 8.6% in February and up 17.9% from a year ago. In addition, warm weather may have encouraged some buyers to purchase a vehicle now, rather than waiting. But the bottom line is that consumers would not be buying vehicles if they lacked confidence about the future.
As a result of the strong figures on auto sales as well as robust chain-store sales, reported earlier today, we are forecasting that overall retail sales were up about 1.9% in February. Moreover, with dealer inventories already very low, automakers will continue to ramp up production. This is good news for the economy and means the Federal Reserve has no justification for another round of quantitative easing.