Car Sales Up -- Noting To Do With The Bakken

Earlier this morning, perhaps on CNBC or the radio, there was talk that automobile sales may hit a record this month.

Light-vehicle sales in October rose to a seasonally adjusted annual rate of 13.3 million, matching February's pace that was the best since August 2009 when sales were boosted by the U.S. government's "cash for clunkers" program, according to Autodata Corp.

Industry sales may be "flat to slightly up" next year, Johnson said today.

"Talk of a double-dip recession appears to be receding," he said. "We need improvement in the labor market to support consumer spending. The European debt crisis remains a concern."

A voice over -- radio, not television -- attributed any sales record to "pent-up demand, greater selection of vehicles."

The question that always needs to be asked, "why this month?" Why not last month; why not next month? What could explain the jump in November, 2011? Certainly pent-up demand didn't just happen this month. I can't quantify "greater selection of vehicles," but it's my understanding that General Motors has been cutting model lines over the past couple of years, and that probably holds true for others.

Could it be that some Americans have more expendable cash? Two things. Federal income tax was due April 15, with four-month extension. That brings us to August. Some high-income folks have finally closed their books on 2010 federal taxes. But for the broad majority of middle-income folks, there was something else: no new mortgage payments. No mortgage payments frees up huge amount of discretionary cash. Mortgage applications fell ten (10) percent last month.

Mortgage applications decreased 10 percent from one week earlier, as refinancing fell despite consistently low loan rates.

The Mortgage Bankers Association's weekly survey on Wednesday showed a 12.2 percent drop in refinancing activity, along with a 2.3 percent decrease in purchases, for the week that ended Nov. 11, with an adjustment for the Veterans Day holiday.

Folks who have the money, but don't want to buy a new home for some reason, will likely spend the cash on some other big-ticket item, especially if the wage earner wants to keep peace in the family.