1. Auto sales in U.S. and Canada may decline by 1.8 million vehicles this year. 2. Stagnation in auto sales could extend over the next decade due to trade wars.
A significant decline in auto sales indicates weaker consumer spending and economic slowdown, historically correlating to S&P 500 downturns, especially in consumer discretionary sectors. For example, during the 2008 financial crisis, a decline in auto sales contributed to a broader market downturn.
The auto industry’s performance is a significant economic indicator; declining sales can project future market weakness, impacting S&P 500 companies linked to consumer spending and manufacturing.
If the global trade war extends and auto sales stagnate, this could have sustained negative effects on manufacturers, leading to prolonged volatility in the S&P 500 over several years, similar to the effects of the 2000s recession.