When revealing its first Industry Report for the year, ALG did not make any significant adjustments to the current used-vehicle supply outlook.
Analysts acknowledged the last major adjustment was made for their July/August 2011 edition.
Looking ahead to when they next roll out a report for the March/April edition, ALG analysts projected to see a positive seasonal pattern.
“Expected declines (depreciation and seasonal pattern) will be within 0.5 points to 1 point on average due to a positive seasonal pattern than what was seen in the January/February edition with varying degrees for particular segments due to differing depreciation rates,” ALG explained.
“Based on the latest economic data, including housing and labor market figures, as well as overall economic growth rates, ALG may make further adjustments in the March/April edition to reflect the current and anticipated economic situation,” analysts emphasized.
ALG contends the general consensus on the outlook of the economy still remains a view of slow growth even with the improvement in labor markets.
“There are still many potential problem areas that need to be worked out including the European debt issues and slow growth in housing prices, among other things,” ALG acknowledged.
“ALG is paying close attention to these metrics, which affect the wealth of consumers, thereby having an impact on current and future big ticket item purchases such as automobiles,” the firm pointed out.
More Economic Commentary
ALG delved deeper into U.S. economic data, beginning with a mention that GDP grew at a 2-percent seasonally adjusted annual rate in the second estimate for the third quarter.
Relative to the 0.4-percent and 1.3-percent growth rates for the two prior quarters, analysts declared this third-quarter number is a welcomed improvement and has dampened thoughts of another U.S. recession.
ALG highlighted consumer confidence also saw a huge bump in November, going from its lowest level in more than two years (40.9 in October) to 56 in November.
“Though this is still far lower than what was seen prior to the recession, and not even close to the post-recession peak, the increase is a good sign as the economy moves further into its recovery,” analysts explained.
“There are clearly still many issues that need to be dealt with, including the prospect of a European recession, which some say has already begun, and the difficulties with the U.S. deficit,” they continued. “However, at present, the recent numbers have at least given some cause for optimism.”
Next, ALG turned its focus on fuel markets, noting there was little change made to the gas price outlook for its January/February edition relative to the November/December 2011 edition.
Analysts indicated oil prices for the last three months through October have been hovering near $86 per barrel while gas prices sat at $3.45 per gallon in October. This is down significantly from the $3.91 that was observed earlier in the year.
“Recent months have seen fairly stable oil and gas prices, though they often fluctuate a great deal from one period to another,” ALG stated.
“With this in mind, ALG expects that gas prices will average about $3.90 per gallon in the 36-month term, and continue to show steady growth in the foreseeable future,” the firm added.
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