Numbers: New car and truck sales in the United States rose 5.4% in February, rebounding from a slow start at the start of the year and providing new evidence of the economy's strength.
Car sales rose at an annual rate of 15.8 million last month from 15 million in January, according to Ward's Intelligence. Economists had expected an annual rate of $15.4 million.
This number reflects the number of new cars that would be sold during the entire year if the same number were purchased each month as were sold in February.
Car sales got off to a slow start in January, but that's largely because the holiday was so crowded. Sales rose in December at the fastest rate in nearly three years.
Analysts say a severe cold snap also kept away buyers in January.
“Some of these sales may be 'retaliation' to consumers who wanted to buy in January but for whatever reason were prevented from buying due to unusually severe weather,” said Will Cumbernoll, macro strategist from FHN Financial.
“Either way, this is an encouraging sign that January was not necessarily representative of total consumer spending in the first quarter,” he said.
Car sales in 2023 rose to a four-year high despite a sharp increase in interest rates. Last year, an estimated 15.5 million new cars were sold in the United States
Sales are expected to rise again in 2024, but higher interest rates may impact purchases in the first half of the year.
However, borrowing costs may fall by the summer, if the Fed cuts interest rates as expected. This could help turbocharged sales.
Car purchases play a large role in retail sales and overall consumer spending, which is the main driver of the economy. Strong car sales also tend to be an indicator of a strong economy.
Consumer spending was very strong in the second half of last year, and it appears that expenditures have not diminished much in the first quarter of 2024.
Projections indicate that the economy is on track to expand at a healthy annual rate of 3% or more.
