The Undead Car Industry Reflects Consumer Confidence, Probably Wants Brains Too

A blog about business and economics.
Oct. 31 2013 6:09 PM

The Undead Car Industry Reflects Consumer Confidence, Probably Wants Brains Too

Ted Cruz: probably celebrated the government shutdown by buying a car.

Photo by Win McNamee/Getty Images

Matthew Yglesias is on vacation.

What do Americans do when political dysfunction becomes commonplace? Like every other set of not-completely-irrational actors, they adjust. Or they buy a car.


The latter appears to be what analysts are expecting, according to Reuters.

The first government shutdown since 1996 undoubtedly did damage to the economy. A number of companies, from eBay to Walmart, said the shutdown impacted them. According to MoneyWatch, Southwest Airlines’ CFO said the shutdown “cost the company about $20 million in revenue.” For total cost, the number $24 billion has been thrown out a lot. Worse, it did incalculable human damage.

But Reuters is reporting that analysts expect tomorrow’s auto sales to be up 12 percent. Alec Gutierrez explained the somewhat surprising news: “The expectations were that car buyers would wait on the sidelines, but because of pent-up demand and credit availability, car sales are expected to increase 7 percent from last month.”

Weird numbers are a way to make good predictions. One reason is that they avoid meta economic effects. A stock’s price is, of course, less about the value of a company than it is a reflection of what everyone else—that is, the market—thinks the company is worth.

The desire to escape such influences pushes some clever analysts pretty far out. One produces a “vice index” that, he tells the Wall Street Journal, “has an 88 percent correlation to personal consumption figures – and a four-month lead time.” The index incorporates escort services data.

This isn’t to say customer confidence is high. Some context, courtesy of a Bloomberg report from earlier today: “The Bloomberg consumer comfort gauge has declined 9.5 points since Sept. 22. In the period around the first of two 1995-96 government shutdowns, that lasted five days in November 1995, the index fell 5 points. During the second, the measure lost 8 points, half of them in the two weeks after the 21-day shutdown ended Jan. 6, 1996.”

But surveys aren’t as good as real numbers (for those interested, Bloomberg’s methodology is here). Paul Eisenstein is a wonderful person and dug up some relevant numbers from the previous shutdown: “Automakers did feel some impact the last time there was a partial government shutdown – for a week in mid-November 1995 and then from December 16 through January 6, 1996 – sales falling 3.2 percent in December 1995 and 2 percent for the entire year.” That’s a pretty stark contrast from the numbers analysts are hoping for.

If tomorrow’s figures look like the projections, it would shed a lot of light on how Americans are adapting to the still-persisting norm of economic brinksmanship in politics. Since it’s easier to claim you’re uncomfortable than it is to put off buying a truck, I think the latter says more about American confidence.



More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

What Charles Barkley Gets Wrong About Corporal Punishment and Black Culture

Why Greenland’s “Dark Snow” Should Worry You

Three Talented Actresses in Three Terrible New Shows

Why Do Some People See the Virgin Mary in Grilled Cheese?

The science that explains the human need to find meaning in coincidences.


Happy Constitution Day!

Too bad it’s almost certainly unconstitutional.

Is It Worth Paying Full Price for the iPhone 6 to Keep Your Unlimited Data Plan? We Crunch the Numbers.

What to Do if You Literally Get a Bug in Your Ear

  News & Politics
Sept. 17 2014 10:36 AM MacArthur Fellow Alison Bechdel Recounts Telling Her Mother About Her Best-Selling Memoir MacArthur Fellow Alison Bechdel recounts telling her mother about her best-selling memoir.
Sept. 16 2014 2:35 PM Germany’s Nationwide Ban on Uber Lasted All of Two Weeks
The Vault
Sept. 16 2014 12:15 PM “Human Life Is Frightfully Cheap”: A 1900 Petition to Make Lynching a Federal Offense
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
Brow Beat
Sept. 17 2014 9:03 AM My Father Was James Brown. I Watched Him Beat My Mother. And Then I Found Myself With Someone Like Dad.
Future Tense
Sept. 17 2014 8:27 AM Only Science Fiction Can Save Us! What sci-fi gets wrong about income inequality.
  Health & Science
Sept. 17 2014 10:20 AM White People Are Fine With Laws That Harm Blacks The futility of fighting criminal justice racism with statistics.
Sports Nut
Sept. 15 2014 8:41 PM You’re Cut, Adrian Peterson Why fantasy football owners should release the Minnesota Vikings star.