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Despite various news reports, I do think we aren't that far away from a second downturn. IMO the economy is artificially inflated, especially when you consider that the US financial institutions have depended on Government handouts to sustain them for the last decade. One false move by a nation or a leader could bring the whole house of cards tumbling down. Whether or not the media/govt. or others say so, I believe the buying public isn't really buying the ' everything is rosy' story.
 

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Some of this is just hangover effects of the past 5 years. The Big 3 predominantly have made it their active strategy to drive up average transaction prices. The problem with such a strategy as the there’s no end to it.

For months there have been reports that consumers are growing tired of the lack of affordability, but none of the domestics want to do anything about; it contravenes internal mandates.
 
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All I know is anyone who wants a job has a job. My small shop can’t get any young men who want to work, and learn a trade. Here in Michigan the IBEW has been advertising for apprentice electricians, these jobs start at $17 and go up to $40 per hour, you must pass a drug test.
I am a recruiter and the same conditions exist here in NC. As for the coming downturn, no signs of it here.
 

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The heavy incentives have been "borrowing" future sales for years now. Why wait? Instead of buying a $25k car in two years when you have no negative equity, buy a $30k car now with a $5k rebate to eat up that negative equity.
Can't afford a car payment? Take longer and longer loan terms. Or use a home equity loan to spread the payment over many more years.

I see lots of remaining good signs in the economy. I also think the growing consumer debt levels will limit spending.
 

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I get what you're saying: any sale of a new good to someone who already has one that hasn't worn out yet is "borrowing from future sales", but it's not happening because of "high incentives", it's a fact of life in the US economy in general: economic growth is driven by increasing consumption - every manufacturer, of every kind of good or service, is trying to get the people to consume more of whatever they make, and yes, there's a risk that some time in the future, people will just say "you know what... I've actually got enough stuff" and the whole thing will collapse.

Retail incentives are a fixed characteristic of the US car market and have been for longer than the age of almost all current models - any car maker that hasn't accounted for incentive programs in their pricing doesn't deserve to stay in business. The decision to produce any car model is planned based on a whole-lifetime retail price, including those incentives.

More importantly, car makers also know that someone is more willing to spend $25k on a car if they believe they were savvy enough to negotiate $5k off the price of a $30k car. The car maker only ever planned to take in $25k anyway.

Supply and demand dictates the price: Most cars actually follow the normal pattern of consumer-durables, with a high introductory transaction-price (not MRSP!) that gradually falls over the lifetime of the product. However, exposing this fact by adjusting the MRSP would hurt sales a lot more: a steadily dropping published price shows customers that there's value in waiting a few more months; on the other hand, incentives are presented as being "short term" offers that you have to act on immediately.

Basically the pricing model of starting with a high MRSP, and holding it high, but offering periodic incentives that get larger over time, is just another way of expressing the standard demand curve (demand for a new product reduces over time, and that low demand pulls prices downwards), in a way that hides this fact from the customer.
 

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All I know is anyone who wants a job has a job. My small shop can’t get any young men who want to work, and learn a trade. Here in Michigan the IBEW has been advertising for apprentice electricians, these jobs start at $17 and go up to $40 per hour, you must pass a drug test.
That's a bad sign for the economy in a way. If demand for labor is higher than supply, less goods and services are created which slows economic growth. Yes it can cause an increase in wages but that can also reduce demand for the goods and services since the higher wages get passed on into the price. The US needs more workers, but we're currently in an anti-immigration phase, which is exacerbating the labor shortage (creating workers from scratch takes a while :) ). (Moderator removed one sentence here.)
 

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All I know is anyone who wants a job has a job. My small shop can’t get any young men who want to work, and learn a trade. Here in Michigan the IBEW has been advertising for apprentice electricians, these jobs start at $17 and go up to $40 per hour, you must pass a drug test.
How are you advertising? Have you been to the local high schools? Are you considering women and “alternatively skinned” people? How about people outside the “young man” age group?
 

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Can't afford a car payment? Take longer and longer loan terms. Or use a home equity loan to spread the payment over many more years.
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These 7 year loans will come back on the manufacturers. It allows you to buy a more expensive car now but will delay when you can buy the next one. Or pile on debt for a car you no longer own. Aka as a really bad idea
 

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Despite various news reports, I do think we aren't that far away from a second downturn. IMO the economy is artificially inflated, especially when you consider that the US financial institutions have depended on Government handouts to sustain them for the last decade. One false move by a nation or a leader could bring the whole house of cards tumbling down. Whether or not the media/govt. or others say so, I believe the buying public isn't really buying the ' everything is rosy' story.
One of the danger signs is the ever-increasing personal debt, especially credit card debt. As soon as the interest rates rise, and the monthly minimum payment with it, families will be pinched hard to make their payments. And they won't be able to revolve the debt, and will default on payments, which sets in motion the whole vicious cycle of restricting credit.
Credit card debt is one of the biggest financial threats right now to the US. Everyone should be working hard to reduce it as fast as possible.
 
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When I turn 59 1/2 next year, I'm taking a 401K withdrawal to eliminate all personal debt. The taxes on it are less than carrying it to its natural conclusion. And my mortgage will be paid off in 2 1/2 years. Between the two, I will free up $1700 per month (just in time for my daughter's college).
 
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Still driving my 2001 XJ Cherokee. House is paid for, no credit card debt, money in the bank. I could pay cash for a new vehicle.
But I'm still trying to decide what compromises I'm willing to live with because no one makes what I really want.
Now I'm not blaming the automakers, they can build what they want. But with what vehicles cost these days I'm certainly not going to do a purchase what I feel like I'm wasting my money.
 

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One of the danger signs is the ever-increasing personal debt, especially credit card debt. As soon as the interest rates rise, and the monthly minimum payment with it, families will be pinched hard to make their payments. And they won't be able to revolve the debt, and will default on payments, which sets in motion the whole vicious cycle of restricting credit.
Credit card debt is one of the biggest financial threats right now to the US. Everyone should be working hard to reduce it as fast as possible.
Absolutely correct, and it is worse for Canadians, who carry some of the highest credit card debt in the world, even exceeding (individual) Americans. There is certainly concern for personal debt within middle class families in Canada, according to a recent report, about 40%, let me repeat that, 40% of Canadians are within 2 pay checques of insolvency. That is terrifying!
 
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