Last month, the Bureau of Labor Statistics posted moderate inflation. This data enables the Federal Reserve to start cutting interest rates. Fears may grow for consumers when rates fall. It stimulates the economy. The risk is that it re-ignites inflation rates.
For now, consumers need to worry about cumulative inflation rates. Not only will prices not fall from previous years but sticky inflation has few solutions. For example, people may ask why orange juice prices are still high despite demand falling.
Orange juice prices are a special case. Poor weather and a disease in citrus fruits will keep prices high.
In the automotive market, dealers stopped adding market adjustments to prices. Unfortunately, firms like Stellantis (STLA) and Ford (F) relied on expensive trucks in their product mix. This resulted in dealers holding far too many unaffordable vehicles that they could not sell.
Used vehicle firms may thrive as new car sales stall. Watch Penske Automotive (PAG), Lithia Motors (LAD), Autonation (AN), Carvana (CVNA) and Carmax (KMX).
Among the automakers, General Motors (GM) has the best prospects. It scaled back on its ambition to sell electric vehicles. GM stock continues to trend higher and has the potential to rise further. The stock trades at a price-to-earnings ratio of 5.2 times.
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