Automobile sales rise 5.4%, providing new evidence of economic strength

This figure reflects how many new cars would be sold throughout the year if the same number were purchased each month as were sold in February.

Auto sales got off to a slow start in January, but that was largely due to the busy holiday season. Sales in December grew at the fastest pace in nearly three years.

Analysts said extreme cold weather in January also kept buyers from leaving their homes.

“Some of these sales may be a ‘recapture’ of consumers who wanted to make purchases in January but were unable to do so due to unusually difficult weather for whatever reason,” said Will Compernolle, macroeconomic strategist at FHN Financial.

“If anything, this is an encouraging sign that January was not necessarily representative of consumer spending for the entire first quarter,” he said.

Automobile sales in 2023 rose to the highest level in four years despite a surge in interest rates. Last year, about 15.5 million new cars were sold in the United States.

Sales are expected to increase again in 2024, but high interest rates may be a burden on purchases in the first half of the year.

But if the Federal Reserve cuts interest rates as expected, borrowing costs could decline by the summer. This can help drive sales.

Automobile purchases play a large role in retail sales and overall consumer spending, a major engine of the economy. Strong car sales also tend to indicate a strong economy.

Consumer spending was quite strong in the second half of last year, and it appears that spending will not decline significantly in the first quarter of 2024.

The economy is expected to grow at a healthy rate of more than 3% per year.