The U.S. economy continued to send mixed signals in March 2015. Recent revised data from the U.S. Bureau of Economic Analysis showed that in the fourth quarter 2014, U.S. GDP grew only 2.2%. This was clearly disappointing to many economists who had estimated that fourth quarter GDP would come in at 2.9% or higher. It was also considerably lower than the BEA’s prediction earlier this year of 2.6% growth for the fourth quarter.
Once again it looks like the U.S. economy will have provided no clear direction having disappointing first and fourth quarter’s that book-ended impressive second and third quarters of GDP growth in 2014.
Positive and Negative Signs
The U.S. economy created 295,000 jobs in February, one of its best Februarys in more than a decade with the Dow Jones Industrial Average and the NASDAQ indices growing by more than 5% in February alone. Recent Bureau of Labor Statistics data shows that U.S. unemployment dropped from 5.7% in January to 5.5% in February, clearly good news for the U.S. economy whose recent unemployment rate peaked at 10% in October 2009.
The disturbing news on the labor and employment front is the labor force participation rate, which measures the percentage of those eligible to work that are employed, was down to 62.8% in February 2015 as compared to 65% in October 2009. February’s number is among the lowest U.S. labor force participation rates since the late 1970s and continues to indicate improved unemployment figures are questionable.
Lower unemployment rates are at least partially being driven by frustrated workers unable to find jobs in their chosen professions and or at pay levels that make a job economically feasible. In most cases, this represents the second person working in a U.S. household and those categorized as having “dropped out” of the work force.
Adding concern, the Conference Board’s measure of consumer confidence fell by 7.4 points to 96.4 in February, with the University of Michigan’s Survey of Consumer Sentiment declining in February, as well.
The U.S. motor vehicle aftermarket is clearly and unequivocally one of the most valued, competitive, and entrepreneurial segments of the U.S. economy. It consists of everything from large Fortune 500 corporations and multi-billion dollar privately held companies to family-owned businesses and entities that serve customers completely online.
In 2014, the automotive aftermarket added an estimated $360 billion dollars to U.S. GDP. To put this into perspective, if the aftermarket were a country, it would be the 32nd largest economy in the world, slightly larger than Hong Kong.
My crystal ball sees a bright 2015 for the U.S. automotive aftermarket. However, industry leaders will need to manage their bottom lines more frugally than ever and invest in human capital as it will be needed to maintain or gain a competitive advantage in the market.