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Chief Market Strategist
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  Job Growth is a Welcome Sight for the Autos
Posted Under: Conceptual Investing
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View from the Observation Deck

  1. The U.S. has created 3.45 million new jobs since March 2010, according to the Bureau of Labor Statistics. The problem is U.S. payrolls declined by nearly 8.8 million jobs from February 2008 through February 2010.
  2. Despite the evidence the labor market is improving, it isn't growing fast enough for Federal Reserve Chairman Ben Bernanke. Bernanke believes the U.S.'s 8.3% unemployment rate is too high.
  3. With respect to the broader economy, Bernanke has stated that consumption levels remain too low. He has not completely abandoned the idea of a third round of quantitative easing, though the probability of doing so is low.
  4. His comments aside, auto sales are rebounding in a meaningful way. J.D. Power and Associates and LMC Automotive estimate that auto sales will be up 6% (y-o-y) in March 2012.
  5. They estimate that 2012 sales will total 14.1 million vehicles, up from 12.8 million vehicles in 2011. Sales averaged 17 million vehicles per year for the 10-year period ended 2007.
  6. There could be pent-up demand for autos. As of Q3'11, new vehicle owners had kept their cars and trucks an average of 71.4 months, nearly two years longer than the average life of ownership in 2003, according to R. L. Polk.
  7. If job creation in the U.S. continues at the current pace, or better yet accelerates, it could boost the confidence levels of all working Americans that their employment situation might be a bit more stable.
  8. That could also translate into higher consumption levels for Chairman Bernanke. And maybe sell more cars.
Posted on Tuesday, March 27, 2012 @ 3:24 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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