Consumer Spending Report Shows Big Drop in U.S. Car Sales

American Auto Industry Slows as Americans Spend Less on Vehicles

The latest data on U.S. consumer spending reveals a glaring trend: Americans are cutting back their expenditures on personal transport.

According to the statistics on consumer expenditures for the year 2016 posted by the U.S. Bureau of Labor Statistics, Americans are buying fewer cars, despite having increased their spending in some other categories.

An average American consumer spent 9.1% less on purchasing new vehicles in 2016, compared to the same period a year ago.

The trend is already beginning to have far-reaching effects on the American economy. Not only is America’s biggest segment of the manufacturing industry—automakers—facing a slowdown in sales, there is also a growing fear that more American factory workers could lose their jobs in the coming months.


The data reconciles with our prior thesis on the American auto industry. It is becoming increasingly evident that the American auto industry is now facing a decline.

America’s biggest automakers—General Motors Company, Ford Motor Company, and Fiat Chrysler Automobiles NV—have collectively cut back on production since the beginning of this year. The companies have been forced to produce fewer cars in the absence of demand.

For the American auto industry, the threat is no longer internal. Not only are Americans spending less on cars, apparently so are foreigners. Exports of U.S. automobiles have also dropped, as is obvious from July’s trade data.

The sales slowdown is hurting American manufacturing, which employs hundreds of thousands of Americans. The latest industrial manufacturing data reveals that U.S. manufacturing has dipped in the most recent month, primarily because of auto companies cutting back on output.

Automakers are idling capacity at their factories, eliminating work shifts, and laying off workers in order to bring production in line with demand. Thousands of factory workers have already lost their jobs this year, and more layoffs could follow if demand for automobiles continues to fall.


Consumer Expenditures—2016,” Bureau of Labor Statistics, August 29, 2017.


Categories: Economic Slowdown, News