Apologies for the hackneyed headline, but it’s true—the American economy is being buoyed by the auto industry, from the ground up. From manufacturing to sales to rising employment, cars are what’s fueling economic growth.
The US economy’s 2.2 percent growth in the first quarter of this year was due in no small part to strong car sales—which have been the strongest since 2008. And that’s in no small part from a recovering economy: banks are starting to lend money again, consumers are regaining their confidence, and people are slowly but surely finding jobs again, says Bloomberg.
“We’re starting to see the spark in the auto sector that was missing initially,” said Joseph Carson, director of global economic research at AllianceBernstein LP and a former economist at GM. “It tells you there’s a certain momentum. A whole host of areas could see the multiplier effect. We’re at the beginning of a very long and durable cycle.”
Likewise, companies are responding, and fast. Ford is adding extra shifts to its plants. GM boosted its 2012 industry-sales forecast. Chrysler is hiring aggressively—good news for the millions of millennials that are just graduating into their parents’ basements. Volkswagen is adding 150 more jobs in Illinois. And Toyota plans to build more Priuses—because demand is outstripping its initial target of 220,000 vehicles per year.
“Auto sales are leading the way in consumer spending,” said George Magliano, the senior principal economist at IHS Automotive. “It’s a function of pent-up demand and all the things that go with an economy that’s getting better. It helps everybody when the auto industry does well.”
As carmakers do well, other sectors do well. Payrolls have increased at automotive suppliers like 3M and Harman, which makes sound systems. Rail shipments are up at Union Pacific and Norfolk Southern, which are both seeing the most business in 4 years. And according to the Institute for Supply Management, US manufacturing grew the fastest in April in almost an entire year.
Cars won’t take the entire credit for these things, of course. But in an election year, it’s nice to see some good news before it gets turned into ugly, mud-slinging rhetoric.