Other than a house, autos top the list of major expenditures by households.
Autos remain a vital component of the U.S. economy, and the news on this front is very positive. May car and light-weight truck sales continue on a streak, with an annualized sales rate of 16.77 million vehicles – up from a 16.04 million pace in April. This was the highest rate of sales since July 2006—almost eight years ago.
The monthly reported seasonally adjusted annualized sales rate is shown in the graph. This indicates that the mega-impact from the recession has completely eroded.
The average new car price in April was $30,303, up $1,200 from a year ago, according to Forbes.
Do not expect that pace to decline much either, as the average-aged vehicle on the road in the U.S. today is 11.4 years old, according to R.L. Polk. This average age has increased each and every year since 2002, when the average age was 9.6 years. From 10.9 years average age in 2012, 2013 saw 11.2 years and progressed to 11.4 years of age in 2014. Part of this can be explained by vehicles being built to last longer and be more reliable.
The aging fleet has placed significant demand on used cars, which have seen used car prices increase 18 percent from 2007 to 2013, according to the National Automobile Dealers Association (NADA). NADA reports that used car prices are up approximately 10 percent than the average price the past few decades.
A lack of sales and ultimately production during the recession is adding to the demand for new and used vehicles.
Finally, with a robust demand for a five-figure purchase, the indication is that the U.S. economy is doing well indeed.