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Auto sales surge

Economy bears say that auto sales are still at extremely low levels (11.8 million at a seasonally adjusted annual rate). Economy bulls prefer to point to the change on the margin: sales have surged some 30% from their low of Feb. '09. I'm in the camp that says this big rise in sales over the past year is another sign of a V-shaped recovery. Improvements like this, even though they are historically modest in size, reflect improving fundamentals in such things as the jobs market, the availability of bank financing, the increased liquidity in the financial markets, and the return of confidence (or should we say the decline of fear and panic). There is no reason to think that this kind of improvement can't continue. I view this as consistent with my expectations for 3-4% growth over the next year or so.

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