America's sputtering auto supply chain
To get inflation under control, auto assembly lines have to run full-throttle. And despite some positive data points, things still seem to be sputtering.
Driving the news: On the plus side, inventories of cars and parts surged 6.9% in December — the biggest jump on record — following a couple of months of revving car production, the Census Bureau reported Wednesday.
Why it matters: Vehicle prices — both new and used — are big drivers of inflation, thanks to a computer chip shortage that crimped car production over the last year.
- Used car and truck prices were up 40.5% over the last year, the second-largest contributor to January's hot inflation reading.
Yes, but: Even with the recent rise in inventories, there are signs that the auto supply chain is still under strain.
- Auto production stats released Wednesday showed output actually fell slightly in January, likely due to Omicron-related disruptions. That was the second straight month production slipped.
- Chicanery from Canadian truckers blocking a bridge to Detroit also hamstrung automakers in February.
What they're saying: "The recent surge in inventory accumulation probably has not been sustained," wrote Ian Shepherdson, of Pantheon Macroeconomics, in a client note yesterday.
The bottom line: It's good that car inventories rose late last year, but don't expect prices to ease until there's a far more reliable supply.
Editor's note: This story originally published on Feb. 17.