Retail spending in the US has grown by 40% between 2009 and 2013. Auto sales have been responsible for half of that growth. It would appear that low interest rates on auto loans has reduced the real cost of purchasing a new car. We have also had latent demand for autos, due the recession, that is now turning into real demand as the economy recovers. However, the authors of this article raise a concern about debt stimulated demand. This does not seem like a real problem to me. Automobile sales have always been financed by debt. Furthermore, there is no reason to believe that poor loans are being made to stimulate demand, and most of the new loans are not being made or securitized by banks. They are being made by financial companies associated with the auto companies. I am more concerned about another problem. An increase in auto sales has usually had a big impact on job growth in America. There has been some pick up in labor demand, but it is nothing like it used to be when Detroit dominated the auto market in the US.
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