Economic Outlook: Source
Reviewing consumer spending we saw growth in the second to last week of 2023 with consumers gearing up for Christmas and putting money on their credit cards.
Showing below by Bank of America you can see that for every segment of wage earner wages have been down over the last six years, but the wage growth percentage is steady. Looking at savings balances to the bottom right you can see that Americans are still well above their savings rates pre-COVID and holding steady at mid-2021 levels.
The first full week of the year looked a little different than the first week of 2024, with an increase in inventory and auction conversion rates. For the first time in weeks, we are starting to see some stability in the market. We’re still seeing prices drop, but nothing like what was experienced back in November and December of 2023, could this be the start of a normal seasonal adjustment and depreciation trends?
- As we progress into 2024, signs of market stabilization are emerging, with two segments reporting gains last week.
- A few segments in the 8- to 16-year-old range also had positive movement last week.
- The most notable increase was in the Compact Car segment, typically an early indicator of market strength in the Spring season, reporting gains.
- On a volume-weighted basis, the overall Car segment decreased -0.39%. For reference, in the previous week, cars decreased by -0.49%.
Retail Sales Market Outlook: Source
Looking at how we ended the year in our starting the year and new and used retail sales you can see that both youth and new friends are on the inclined with the continuing softening of the retail price shown below. It’s likely that the sales pace will remain the same during the tax season into the spring but it’s not likely that the price straight walk continues to solve them.
Retail Supply Market Outlook:
Supply of inventory at the end of last year ended higher than any year prior going back to 2019 but we’re starting off the year and a deficit for both new and used as shown by the 1st iteration of the trend line and week 1 through wait 3 below. As we go into 24 and 25 we should see this supply trend continue in used cars because of the lack of replenished inventory from 2020 and 2021.
Car Edge got it right. In 2023 and 2024, it’s the reduced supply of used cars that ensures prices will remain elevated. Used car prices rose 36% in 2021, only to fall 7% the year after. As 2023 comes to a close, it looks like used car prices will end the year about where they began 12 months ago.
The roots of the used car shortage can be traced back to the supply chain problems of 2021-2022. The production of new cars slowed, and sales dropped like a rock. Fewer cars sold in 2021-2022 resulted in fewer trade-ins and subsequently, a tightened supply of used vehicles. With approximately 15 million new cars that were initially scheduled for production globally never seeing the light of day, the ripple effect has led to a lasting shortage of used cars.