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Auto sales helping to drive the economy

February 10, 2011 |  4:10 pm

The auto industry is powering up to help the economy.

Surging car sales could boost economic growth this year by nearly a full percentage point, its biggest contribution to the economy in more than a quarter-century, according to a new analysis.

Pent-up demand from consumers who are feeling more sanguine about job security and income levels could drive sales volume to as many as 13.6 million vehicles this year, said Carl J. Riccadonna, senior U.S. economist at Deutsche Bank in New York.

That would be a 17% increase from the 11.6 million vehicles sold last year and could add as much as 0.8% to U.S. gross domestic product, the most since 1984, Riccadonna said.

The rise in car sales “appears to reflect an improvement in households’ confidence in the economic outlook,” Riccadonna wrote in a note to clients, adding that “households typically refrain from big-ticket purchases, such as autos, until they are more confident about their own economic prospects.”

Auto sales could keep rising throughout the year as consumers feel more confident in the economy and as lenders become more generous with credit, Riccadonna said.

-- Walter Hamilton

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