Cars and Drivers
GM Earnings May Be Good Recession Measure
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General Motors Co.’s (NYSE: GM) earnings could be a good measure of the general economy, if auto sales make a good barometer of consumer spending and confidence.
GM’s revenue for the most recent quarter should hit $37 billion, with earnings of $1.21 per share. GM’s U.S. sales are a large enough portion of its overall revenue that they will say a great deal about the overall car market, in which the company holds a 17% share.
Some analysts believe that American car sales won’t improve on the 17.5 million that were sold last year. With cheap gasoline and low interest rates, the consumer ought to push auto sales higher. The car industry has as many, if not more, advantages in the economic environment that in 2015.
Car sales could taper off this year for several reasons. While the attitude of the consumer is first among these, Americans may have fulfilled their appetite for new cars. Americans still hold their cars for over five years, which could pressure sales. Fewer young Americans have driver’s licenses than in the past. Companies like Uber have replaced the use of cars, particularly in cities.
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