Fedor Lavinia, IE 8731

Oral Presentation Overdrive: How America's Amazing Car Recovery Explains the U ! Economy
There was a time, not so long ago, when cars supposedly personified the American character. Their aggression, their style, their rugged independence. In the last 30 years, the automobile has faded slightly in the American imagination, but today the car industry does, in fact, explain the American economy. The car economy, a small but mighty sliver of American industry, has been on a roll. Since 00!, car production has nearly doubled, accounting for between "# and 0 percent of our whole recovery.

$ord and %& said this past August was the best month for car sales in seven years . '( )ower is saying it might be the best month on record. *ut man cannot live on cars alone, and neither can countries. +,e-re not big enough to tow the whole boat,+ Sean &cAlinden, chief economist at the .enter for Automotive /esearch, told. +It-s lonely all out there by yourself.+ $or decades, housing has been the engine the moves recoveries. ,hen people would clean up their debt, they-d swing a house. And, at least since "!#0, a house meant a garage, and a garage meant a new car. As 'ordan ,eissmann has written , cars and houses accounted

Fedor Lavinia, IE 8731 for more than half of the recovery in the "!00s, a third of the +/eagan /ecovery+ in the early "!10s, a sixth of the recoveries in the early "!!0s and 000s. *ut this time, cars are leading houses, than2s to a surprising source3 older Americans. "[Demand] is coming from an increased buying rate of people over 55" &cAlinden said, "which is scary because we don't have a lot of repeat sales left in us." 4oung people are essentially loc2ed out of the car mar2et, 5ust as they have been loc2ed out of the housing mar2et 66 and the labor mar2et. Average vehicle prices are as high as ever, but wages are low, and unemployment for young people has typically been twice as high as for the overall population. There is also evidence that cars have fallen from their cultural perch, s7uee8ed by urbani8ation among young people and the growth of a new, expensive, social, mobile technology 66the smartphone. 4oung vs. old might not be the most important binary for car companies. That would be rich vs. poor. The 9.S. is beginning to loo2 li2e the aristocratic auto mar2et we-re used to seeing in :urope, &cAlinden said, where the top # percent buys most of the new cars and the bottom 0# percent only buys old and used. "Seventy-five percent of households here are relying on used cars thin!ing '" hope that rich guy is done." he said. There is #no such animal as the $.S. consumer.% three .itigroup analysts concluded in the heart of the real estate boom in 00#. ,e have the rich and the rest. As (on )ec2 wrote in his summer 0"" cover story for The Atlantic, for many industries, +the rest+ 5ust doesn-t matter. &ll the action in the &merican economy was at the top' the richest ( percent of households earned as much each year as the bottom )* percent put together+ they possessed as much wealth as the bottom ,* percent+ and with each passing year a greater share of the nation-s treasure was flowing through their hands and into their poc!ets. "t was this segment of the population almost e.clusively that held the !ey to future growth and future returns. The auto recovery, li2e the 9.S. recovery, is built on a fragile assumption3 /he rich can be rich enough for the rest of us. According to .A/ figures shared with The Atlantic, total motor vehicle output has grown 0# percent faster than total industry employment. ,hy; $irst, the auto industry is seeing record levels of overtime. Second, car companies are relying on logistics and truc2ing companies 66 not typically counted in auto manufacturing categories 66 to wor2 in and around the factories today to assist with assembly and se7uencing of parts. These wor2ers, even if unioni8ed, tend to be paid less than members of the auto union. Third, car companies are importing more finished parts from &exico 66 hatchbac2s, body panels, electronics 66 which means cheaper &exican wor2ers have replaced Americans.

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+,e suspect that the record levels of parts imports is a big reason why employment is stuc2 in the rut,+ &cAlinden said. The parts sector in &exico employs #<0,000 people, compared to about <10,000 in the 9.S. /emar2ably, &exico-s industry is already +bigger+ than the 9nited States. As we-ve seen with other global industries, American employment has been restrained by large companies moving more labor along their supply chain to cheaper countries. American companies simply don-t need more Americans. The modern auto recovery is, over all, a sensational story. America needs growth, and they-re getting more of it from cars than perhaps another other industry. *ut unpac2ing, this story reveals a more frightening picture of American industry and productivity. The mid6 0th century American story has been replaced by a new one, where one of the country-s most iconic industries scarcely needs more American wor2ers to do all the wor2 it needs.