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Car sales rise at 17% annual rate

The headlines are focusing on the fact that August car sales were down 19% from a year ago, but that is a bad comparison because August '09 sales were boosted temporarily by the cash for clunkers program. If instead we compare current sales to April of last year, when the market looked like it had hit bottom, then sales are up at a 17% annualized rate, abstracting from government distortions and the typical monthly noise in this series. Sure, the level of sales remains extremely low, but to me it's clear that sales have risen at a pretty fast pace since the recession ended. Sales have generally been stronger than expected, so this results in some inventory depletion, which then results in some production ramp-ups, which in turn trickles down to more orders from suppliers, etc. This is the way any recovery happens.

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