No More "Stealth' Recession for U.S.; Now It's For-Real

Bailout or no bailout, the credit crisis is going to take some time to fix.

The auto industry is going to stay in its own private recession for at least the next several months, and maybe the rest of the U.S. economy, as well.

“Things are still going to be tough for a while. The main thing will be credit,” said Michael Luckey, an independent auto industry analyst with Luckey Consulting Group, Kinnelon, N.J.

“The economy is going to be in more of a noticeable recession for the next six months or so. Since January, we’ve been calling it a ’stealth’ recession. It’s been hard to notice, except for the auto industry and housing. We think the whole economy is going to be in a recession the next six months or so,” he said, in an Oct. 3 interview shortly after Congress passed a bailout package aimed at unfreezing the credit markets.

“That means 2009 is going to get off to a very bad start,” he said.

On the positive side, Luckey said he expects some recovery around the second half of 2009, which is more optimistic than some analysts, who expect sales to keep falling next year. Even some relatively optimistic analysts don’t expect any meaningful recovery until 2010.

“There will be some good things, I don’t agree with comments I’ve seen, that next year is going to be so much worse,” Luckey said. He said he expects light-vehicle sales of about 14 million this year, improving to around 14.2 million or 14.3 million in 2009. That’s in line with a recent U.S. auto sales forecast from J.D. Power and Associates.

Luckey said he expects the next president, whoever that is, to push through an economic stimulus package, designed to create jobs; for the Federal Reserve to cut interest rates in the next few months; for oil prices to stabilize around $100 per barrel; for inflation to come down, helping consumer purchasing power.

“So, there are a lot of reasons to think it’s going to get better next year. We still think there’s going to be a recession. Passage of the bill is not going to improve things right away,” Luckey said.

“We certainly believe that (improvement) is going to happen, but it’s going to be at least three or four months before things are pretty much back to normal,” he said. “In the meantime, it’s going to be pretty tough, particularly for autos.”