The above 2 charts show US jobs and car sales on a monthly basis, side by side. They cover the years 2008 – 12, and the combination provides a clear message about demand trends:
• The jobs total began to improve in 2011 (green line)
• They rose 2m between January 2011 and last month (red square)
• Auto volumes have similarly gained over the period
• August sales were up 200k last month versus 2011
Over the past 20 months, job gains have averaged 141k/month. Auto sales this year are so far up 15% versus last year.
This is encouraging news, as clearly the numbers are heading in the right direction. But set against the unprecedented activity of the US Federal Reserve, the results are very disappointing.
It has cut nterest rates to zero, and supplied $2.3tn of liquidity into the banking system. Yet the number of jobs is still 4.7m below 2008 levels. Likely auto sales this year of 14m are similarly well below the 16m+ levels seen before the crisis.
As the blog will discuss on Thursday, it thus seems increasingly clear that central banks on their own cannot solve today’s crisis.