The Shifting Winds in the US Auto Sector

The recent Federal Reserve Senior Loan Officers survey showed that while demand for US auto loans has weakened, banks are tightening lending standards for the borrowers who are seeking loans. As the Federal Reserve continues to hike interest rates, it will only become more expensive for consumers to finance vehicle purchases.

Auto sales have declined year to date despite used vehicle prices falling 7.6% since May 2016 and dealers increasing incentive spending by 11.9%. If current trends continue, the US auto sector will act as a negative headwind to US GDP and US CPI growth.