14 millions Americans are out of work. The government is facing default. U.S. home prices are at their lowest level since 2003, and Robert Shiller, the economist who co- founded the S&P/Case-Shiller index of U.S. home prices, said a decline in property values up to 25 percent in the next five years “wouldn’t surprise me at all.” From Bernanke on down, everybody is scaling back the rhetoric that economic growth is just around the corner. Suddenly, automakers aren’t so sure anymore about all that pent-up demand that will bring back U.S. car sales back to their old glory. Reuters asked around and didn’t come back with good news.
Hyundai Motor America Chief John Krafcik is the most outspoken: “When people don’t have home equity, it’s often very difficult for them to pull that trigger and buy a new car. Jobs are still an issue, housing is still a big issue and I don’t think that’s talked about enough in the context of our industry.”
And it doesn’t look like there will be many new jobs from Detroit.
“Our manufacturing folks have been tremendous at squeaking out extra units through improving line rates, adding on extra shifts,” GM’s U.S. sales chief Don Johnson said. Translation: No new jobs.
Ford Motor Co’s global marketing and sales chief Jim Farley said Ford was not making big bets on production.
The big recovery has been postponed for a year or more.
“There’s probably enough pent-up demand to keep us going at this rate for at least another 12 months, by which time we would fully expect the underlying fundamentals of the economy to really start kicking into gear and having those fundamentals drive the industry further,” said Don Johnson.
Uh-oh. “Enough pent-up demand to keep us going?” Even the pent-up demand is not what it used to be.