LAS VEGAS — The U.S. auto market will “continue to improve” on the heels of a good economy and low interest rates, without threat of recession through at least March 2018, said Eugenio Alemán, director and senior economist at Wells Fargo Securities.
“We have tried to calculate that recession probability, and it is 0% today,” he said at the 2017 Auto Finance Summit, adding that the prediction extends for the next six months.
Another contributor to the market’s growth is the rising age of vehicles on the road, meaning that many people will be looking to purchase a new car soon.
“The average [age] is 11.5 years, which is the highest in history and means that there’s plenty of room for the auto industry to continue to grow over the next several years,” he said. However, “in 2020, we have to start thinking about the next recession,” he said, adding that because the economy has been expanding for the past eight years, a recession will inevitably occur.
To that end, the Federal Reserve is working to increase interest rates so it can lower them when a recession occurs. The Fed is expected to increase interest rates 25 basis points in December, 50 basis points in 2018, and 75 basis points in 2019.
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