Notes on the Week Ahead The Outlook for Autos
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Dec 1, 2025 Explore the fascinating evolution of the auto industry in America, from gas-guzzlers in the 1980s to today's shifting market dynamics. Discover how vehicle sales impact the economy, particularly during recessions. Uncover the surprising resilience of 2025 sales, despite economic concerns. Delve into challenges like tariffs, EV transitions, and labor shortages. Analyze the influence of affluent households on demand and consider the long-term implications of demographics and technology on the future of transportation.
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Early Memories Of America's Car Culture
- David Kelly recalls arriving in America in the early 1980s and seeing a campus full of large, gas-guzzling cars.
- He uses this personal memory to illustrate how central autos once were to U.S. life and the economy.
Autos’ Outsized Role In The Business Cycle
- Auto sales are highly cyclical and have historically driven large shares of GDP declines in recessions.
- New vehicle purchases are delayable and recorded at sale, so sales swings disproportionately affect GDP.
2025 Auto Sales Show Unexpected Resilience
- Despite recession worries and tariffs, light vehicle sales in late 2025 remain near last year's average and show resilience.
- Temporary buying ahead of tariffs and other unusual 2025 drivers helped sustain sales.