Atlantic Monthly Death Spiral Watch
Walter Jon Williams: Implied Spaces

Jim Hamilton Assumes the Role of Dr. Doom

Jim Hamilton writes:

Econbrowser: Recession and the oil shock of 2008: [T]his seems to be unfolding according to [the] script. The dramatic abandonment of gas guzzlers by American consumers continues, with last month's sales of domestically manufactured light trucks (which includes the once almighty SUV category) down 28% from June 2007. Sales of imported SUVs, which had been holding up better, plunged even more dramatically. For the lighter car category, sales of domestics fell 13%, while imported cars, which tend to get better mileage, eked out a 4% gain....

The shift is a necessary change in the long run, but in the short run will definitely put additional strains on the U.S. economy, as it's precisely this kind of disruption in domestic spending that appears to be responsible for the contribution that historical oil price shocks have made to previous U.S. economic recessions. FT conveys some of the gloom:

The US car market is heading for its worst year in more than a decade as Americans turn their backs on large, gas-guzzling vehicles, according to June sales data due out today.

The figures come as the big US carmakers scramble to adapt to the dramatic shift in demand to more fuel-efficient cars and crossover vehicles. Chrysler yesterday said it would close a US minivan assembly plant and cut one of two shifts at a pick-up truck site. Chrysler's move will result in 2,400 job losses at the plants, both in St Louis. There are even dark murmurs that GM, once the biggest company in America, could conceivably be forced into bankruptcy...

This makes me think that is time to start sending out more stimulus checks--advances on next April's refund checks.

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