Unemployment, Supply Shortage Stalling Car Sales

Auto sales were on a steady uphill gain early in 2011, but that has flattened. The underlying causes seem to be a recent spike in unemployment rates and supply disruptions from Japan.

Everyone can understand how unemployment will stall car sales. Another side of unemployment is that, those with jobs, saw very little real income growth. American consumers are seeing their available income shrink even as hourly rates increase slightly. The cost of living is rising faster than the average paycheck.

The shortage of the fuel efficient vehicles from Japanese automakers continues to affect new car sales and, in turn, used car sales. ''Buyers remain determined to wait out the supply disruptions until incentives reappear,''  according to the National Association of Federal Credit Unions Macro Data Flash report. ''Vehicle sales are expected to pick up modestly during the remainder of the year, but a robust recovery will not occur as long as unemployment and low income growth persist.''

There are plenty of subprime auto loans available. Banks and credit unions have relaxed their lending requirements and are considering lower credit scores. Interest rates are down to 3.85% across the nation. The American consumer is just not feeling confident in the economy and is letting those loans sit.