Cars drive spending

Demand for new and used autos spurred American spending last month.

U.S. Commerce Department officials said Monday that consumer spending rose 0.4 percent in July after three sluggish months. Spending dropped 0.1 percent in April, rose just a bit — just 0.1 percent — in May and was flat in June.

Also, personal incomes were up 0.2 percent in July, which was less than expected but an improvement over June when incomes were flat.

J.B. Hackman, a dealer principal at Bob Poynter Chevrolet, Cadillac and GM in Seymour, said the Bob Poynter GM and Ford dealerships can attest to the increase in car sales.

“We are back to back to back with three really good months,” Hackman said Monday afternoon. “Really strong sales, service and body shop. We’re not too far off pre-downturn business.”

Hackman credits the local economy for that upswing, pointing to recent developments that include plans by Cummins Inc., Excel Manufacturing, Cereplast and Aisin to expand their operations in Seymour.

“Aisin is working six days a week and I’ve heard Walmart Distribution is planning to hire,” Hackman said. “I think the local economy has a lot going for it.”

Jimmy Adkinson, general sales manager of Bowman Dodge Chrysler Jeep in Seymour, said much of the same — improved sales and more vehicles going through the service garage for maintenance.

“It’s going well,” Adkinson said. “We have continual growth. I think the service and the way people are treated help sell cars here.”

Jay Deckard of Deckard Auto Sales, Seymour, said the latest consumer spending report is part of a trend he’s felt for the past 15 months at his used car business on West Tipton Street.

“Our sales have been noticeably higher since the beginning of last summer,” Deckard said Monday afternoon.

He said people appear to want to buy but may not be confident enough to buy a new vehicle, so they’re buying used.

Hackman said used cars are selling well for his business, as well.

Strong used car sales are keeping the values from depreciating as much as normal and making Deckard’s job of stocking his lot more difficult.

“We’re having to work really hard to find quality used cars, but we manage to get it done,” Deckard said.

The July spending gain was the highest since a 0.5 percent rise in March, The Associated Press reported. But the concern is that demand could taper off in the second half of this year if unemployment remains near double digits.

Jackson County’s unemployment rate was up slightly to 10.2 percent in July, although employers reported more people on the job for the month.

If Americans don’t have jobs, they don’t have the income to support spending. Consumer spending is critical because it accounts for 70 percent of economic activity.

Peter Newland, an economist at Barclays Capital Research, told the AP he viewed the July increase in spending as a good omen for the rest of the July-to-September quarter.

“All in all, July’s report supports our view that consumer spending will continue to recover, albeit modestly, supported by a gradual improvement in labor income,” Newland wrote in a research note.

Dave Luecke of Luecke Audio-Video & Appliances in Seymour said he’s not yet exactly seeing confidence in consumers, but the store on West Tipton Street is seeing strong traffic on appliances, especially front-load laundry appliances.

“We’re holding our own,” he added.

“People are looking for energy-efficient appliances,” Luecke said. “I think they’re trying to lower their utility bills. Some appliances can have a strong impact.”

Bill Bailey, president of Greater Seymour Chamber of Commerce, said consumers looking for value doesn’t surprise him.

“I think we are still slower than we used to be to let go of our dollars, and value has taken on new and heightened meaning,” Bailey said Monday night.