Topic: economic analysis
As states begin to reopen and CarGurus leads trend upward again, it seems we might be through the trough. These signs indicate that the US might soon emerge from the worst of the COVID-19 pandemic. However, we must be cautiously optimistic because it’s unlikely that the unemployment rate has reached its peak or that we are fully in recovery mode. And for the auto industry, there is an additional headwind on the horizon: credit availability.
While demand for vehicles is growing—US lead volume on CarGurus has nearly returned to the same level as February—the sales bounce back in the auto market may be tempered by the availability of credit.
While I personally think we’re weeks, if not months, away from knowing exactly how long the economy will take to fully rebound, consumers are coming back—and they’re submitting leads. In fact, U.S. leads* on CarGurus are almost at the same level they were at the start of February. Yes, February generally represents a smaller share of units sold than March and April, but the fact that consumer interest is trending up this early is a positive sign.
While total U.S. lead volume on CarGurus has nearly returned to the same level as February, lead volume varies by price bucket, and I’ll dig deeper into this below.
As the economic data catches up with the COVID-19 pandemic, we’re poised to start seeing many economic indicators at historic levels or levels we haven’t seen since the Great Depression. One example of this is jobless claims, also referred to as unemployment claims, which set a new record the week ending March 28, 2020, when 6.6 million people filed for unemployment.
While the number of jobless claims set a record at the federal level, the impact at the state level has also been unprecedented. In the coming weeks, many states will surpass the number of claims filed throughout the entirety of 2019—and that’s if they haven’t already.
The automotive sector has played a role in the jobless claims number, but due to self-isolation policies, leisure, hospitality, and retail have had the largest impact. A turnaround will happen though. When the self-isolation guidance from the federal and state levels ends, Americans will resurface and go out once again. Demand for services and goods (like vehicles) will return and the jobs will follow, but it might take some time before we reach a new normal.