Explaining Southern California's economy

Ford has discovered that America loves small SUVs

2013 Ford Escape


The Ford Escape has been a big sales success for Ford so far this year.

Prior to the financial crisis and the meltdown of the Detroit auto industry, Ford reliably sold hundreds of thousands of its full-size SUV, the Explorer, every year. The high water mark was 2002, when 433,847 of the vehicles were unleashed on happy consumers.

Since 2005, however, and with the end of the era of cheap gas (seemingly), Explorer sales have never climbed above 200,000. 

The Ford Escape, a small SUV, is another story. Ford just released sales numbers for September, and the Escape is one of the highlights. The vehicle is on track to beat last year's sales of more than 250,000, which was itself a record.

In terms of volume, the only vehicle that did better in Ford's lineup was the F-Series — basically the F-150 pickup truck, America's best-selling vehicle for decades.

The Escape appears to be doing well for a couple of reasons. First, it got a design update for the 2013 model year, aligning it more closely with the look of the Explorer but also moving toward a new undergirding architecture that separates it from Escapes of the past and make it more of a small crossover.


With Jeep and Fiat, Chrysler has a very good September

Scott Olson/Getty Images

Chrysler was almost dead in the water in 2008. Now it's posting some of its best sales since 2007.

The automakers are reporting September sales today, and the stage is set for a pretty solid month, keeping the U.S. on pace to see 14.5 million in new car sales for the year, and improvement of 1.5 million over last year. 

Remember Chrysler? The company was widely regarding as a basket case in the industry in 2007-08, when it lurched into a government bailout, and bankruptcy, and subsequent takeover by Italy's Fiat. Flash-forward four years and Chrysler/Fiat is a lean, mean automobile-selling machine. 

Its September results are interesting for two reasons. First, the company posted a 12-percent gain over last September and its best month for sales since 2007 when it was, you know, not yet bailed out, bankrupt, or taken over by Fiat. Second, it posted good numbers for one of Chrysler's most iconic marques, Jeep, and specifically the rough-and-tumble Jeep Wrangler, the spiritual core of the brand. But on the Fiat side, the revamped 500 model is also gaining some traction, after an iffy introduction to the the U.S.A. 


August auto sales: A very good month for pickup trucks and Detroit

2013 Ford F-150


Ford saw double-digit sales increases from last August for its pickup trucks. Chrysler also sold a lot of pickups, as did GM.

A good month for pickup trucks means a good month for Detroit's Big Three — General Motors, Chrysler, and Ford. Although ironically, it was Ford and Chrysler reporting big gains in pickup sales from August of last year, while GM did well with its lineup of smaller, more fuel-efficient cars.

Longtime GM watchers are still scratching their heads at how a company that, pre-bailout and bankruptcy, had abandoned the small-car market to imports so it could concentrate on the fat profits that trucks and SUVs bring in. GM did okay with its main pickup, the aging Silverado. Just not as well as its Motown rivals.

Pickup truck profits are a good thing, for two reasons. Ford and Chrysler saw double-digit increases, while GM had to settle for the mid-single digits. That's money in the bank for Detroit 's carmakers. Meanwhile, pickups being sold means that contractors are trading in their aging wheels for new sheet metal — and that's a clear signal that the new-home market is regaining some strength. You can't haul stuff to the building site in a pickup that falling apart.


Southern California house prices: It's deflation, folks

Foreclosures Spike As Banks Accelerate Loan Default Notices

Kevork Djansezian/Getty Images

A for sale sign is posted in front of house on September 15, 2011 in Glendale, California. Sales in California are on the upswing, but prices are unstable.

DataQuick has crunched the numbers on March housing sales and prices in Southern California. There's good news and bad news. From my perspective, the bad news is much more bad than the good news good. 

This is from DataQuick:

March sales of newly built homes rose almost 9 percent from a year earlier, marking the second consecutive month with a year-over-year gain. But March’s new-home tally was still the second-lowest for that month in DataQuick’s records back to 1988. Last month’s sales of existing (not new) single-family detached houses were the highest for a March since 2010, while resale condo sales were the lowest for that month since 2009.


The median price paid for a Southland home last month was $280,000, up 5.8 percent from $264,750 in February but down 0.2 percent from $280,500 in March 2011. The March median was the highest since the median was also $280,000 last September. The year-over-year decline in the March median was the smallest since February 2011, when the $275,000 median was unchanged compared with a year earlier.

Last month’s median was 13.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 44.6 percent below the $505,000 peak in mid 2007.


We're driving less...because we have fewer cars

U.S. vehicle miles driven have dropped. And it's probably because the size of the fleet has been in decline.

I felt like I should pull out Occam's Razor over the weekend when I spotted, via Twitter, some speculation from Joe Weisenthal of Business Insider and later Matt Yglesias of Slate about why the number of vehicle miles driven in the U.S. has been dropping. 

Weisenthal toys with out all sorts of correlations to explain the decline — everything labor reductions to gas prices to an aging population...and of course e-commerce! This last part is what Yglesias picked up on. By the time the these two had finished, they'd trotted out no less than ten charts. Here's Matt:

One very interesting social trend we have going on in the United States right now is the  decline in vehicle miles traveled, which initially looked like a mere recession thing but seems to be continuing even as the economy has added jobs for the past 18 months. Joe Weisenthal was speculating on twitter that online shopping might be the reason.