Explaining Southern California's economy

LA Auto Show: Do we have a theme yet?

LA-Auto-Show-Ext-MDB

Matthew DeBord

The 2011 LA Auto Show is in many ways more about what's going to happen with the car business in 2012.

Yesterday, on KPCC's AirTalk, I said that the 2011 LA Auto Show would be about the revival of the small car in America — by American automakers! — and the return of Detroit, after the worst couple of years in its history. You know, that whole bailout-bankruptcy thing.

The mood at the actual show is more one of expectation. On balance, while 2011 was a lot better than 2009, it was a dismal year by the historical standards of the auto industry. Even setting aside the major disruption of the Japanese earthquake and tsunami, which created a crisis in the global automotive supply chain, the industry is on track to sell only about 13 million new cars and trucks in the U.S. this year.

Contrast that with the 17 million it sold in 2005.

The hope is that the worst has passed and that 2012 will see the market return to something that more closely resembles normal, even it's a New Normal of around 14-15 million new cars sold in North America.

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Be thankful for expensive gas — and a gas tax?

Matt Yglesias makes a useful point about gas prices that I think applies to all of us in car-mad Southern California: 

It’s important to see that under present circumstances, anything that succeeds in promoting robust economic recovery would raise the price of gasoline….After all, unemployment’s 9.1 percent. If it fell to 7 percent, that would mean a large increase in the share of Americans who are commuting to work on a daily basis. And the United States of America is both a large country, and one in which commuters consume an unusually large quantity of gasoline as they go about their business. Consequently, 2.1 percent of the American workforce shifting from unemployed to employed means a meaningful increase in the consumption of gasoline.

The global oil markets are complex and don't always make sense at the pump. The price of oil falls, but the price of gas remains high. Or at least higher than we think it should be. I won't even get into the various issues involved, which range from refining capacity to OPEC production planning. There's a reason why some economists spend their entire careers looking at this single commodity. 

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