“Instead of a slowing economy, we have a stabilizing economy and most importantly, a stabilizing labor market,” said the estimable Jonathon Smoke Cox, Automotive chief economist. “We can stop fretting about a soft landing and acknowledge we’ve navigated restrictive rates, slowing job growth and increasing unemployment. But as we end 2024, momentum is back on our side. And the labor market is expected to remain at full employment,” said Smoke.

“With the Election we took a major negative off the table in the prospect of higher tax rates slowing the economy in the future, and while the exact new tax policy is yet to be determined, measures of consumer and business sentiment have strengthened. Perhaps most importantly for the vehicle market, we’re seeing credit access improve as well. Incomes are higher. Prices of used vehicles are lower. New vehicle incentives have risen and loan approval rates are up. “said Smoke.

The psychology shift as AutoInformed interprets it means that it’s now a bigger gamble to expect prices and rates to be lower in the future. Given Trump’s shoot from the lip on inflation and tariff policy – both could be higher by the end of 2025.

Smoke put it this: “The risks are all related to policy shifts. Let me summarize the major ones for auto:
• A new tax bill will lock in 2017’s tax cuts and maybe more. The IRA could be reduced or eliminated as part of that.
• Fuel efficiency stands in tailpipe emission targets could be reduced.
• Immigration could be restricted and deportations could shrink the labor supply and tariffs could be lathered on disrupting the North American trading region that has enjoyed free trade for 30 years and breaking a truly global industry – sending new and used vehicle prices higher overnight.

“None of this has to happen,” said Smoke, “ and we think most will take time to come to fruition… We hope for the best. So let’s look at the major macro factors. As we end 2024. Real GDP growth slowed only modestly, and again we’ve seen performance that has been better than originally forecasted. The third quarter saw robust growth of 2.8% and the fourth quarter is likely to be at worst at potential for the US economy.