Buying Some Cars, Not Buying Homes

Yesterday came news of jumping auto sales, all domestic producers scoring meaningful gains. To be sure, the same story also predicted that total auto sales this year will be significantly lower than last year. The percentage increases were large because we had sunk so low. This suggested that it might be good to look at two categories of private fixed investments over a longer period of time, thus from 1990 to the end of the second quarter of 2011, available from the Bureau of Economic Analysis (link); the table number is 5.3.3. The data I am showing are quantitative indices calculated by the BEA, with 2005 representing 100.

Expenditures began to plummet in the first quarter of 2006 already. Halfway through 2011, transportation equipment sales (largely autos, vans, and pickups) were still a long distance from the level in 1999. Expenditures on single family residences have stopped dropping but are not rising. The early onset of a slump in these indicators tells us that the public already, somehow, knew that something was amiss early in 2006—underlining for me the suspicion that we are possibly seeing a genuine sea-change. That vans and pickups lead sales recently reported, however, goes counter to that feeling. That certainly sounds like the same old, same old thoughtlessness.