On a day when the Dow drops two-hundred points after a weak jobs report, you will think I have gone to the moon when I tell you the drop is an overreaction and I maintain my position that the US economy is still moving forward, not backward. Here are three reasons.
- General Motors Co. says its U.S. sales rose 11 percent in May, its highest monthly total since the Cash for Clunkers deal in August 2009.
- Ford Motor Co. says its U.S. sales rose 13 percent in May on strong demand for its F-Series pickups and SUVs. Ford says demand for trucks has followed an increase in new home construction since the start of this year.
- Chrysler’s U.S. sales jumped 30 percent last month, a sign that Americans remain determined to replace their aging cars despite the falling stock market and shaky consumer confidence. The company said it sold more than 150,000 cars and trucks in May, compared with 115,000 in the same month a year earlier.
The above statistics are telling as to the state of the US economy, especially when put in context – In 2009, US cars sales dropped to 10.4 million, down from 16.1 in 2007. We have come a long way, baby, and the momentum is still forward.
Industry analysts expect 2012 US car sales to reach 14.5 million, up from 12.8 million last year.
Compare the above to state of the US car sales market in 2009, and then think about the market’s response today to a weak jobs report that tells us what happened, not what will likely happen.
Finally, we have some good news out of Europe. The good people of Ireland did not cut off their nose to spite their face. They clearly and resoundingly stated they want to stick with the EU, even if it means harsh austerity for them.
Chief official: 60.3 percent of Irish voters say “yes” to ratifying EU deficit-fighting treaty.
Let’s hope the results from the Irish referendum move the Greeks to the same position, that voting against the EU accord is an economic death knell. The EU is the only economic lifeline the Greeks have, and not belonging means years and years of deflation and recession …
Consumer spending rose modestly in April while incomes grew more slowly and inflation pressures eased.
A little bit of oil and water above, but one can attribute the decline in income growth to the weak hiring numbers over the last two months. Again, look to the future, not to the past for economic direction, and speaking of that …
Brent crude fell to a 16-month low below $98 per barrel on Friday as weak U.S. jobs data, poor manufacturing data from China and a spiraling euro zone debt crisis deepened worries over the prospects for global economic growth.
WTI crude stepped closer to $80. As of this writing, the price is down some 4% at around $83. Keep in mind, all those folks that bought new cars are gonna have some extra cash in their pockets, if gas prices follow oil prices, and, soon enough, they will.
Trade in the day – Invest in your life …
