Just do what we do, America, and everything will be OK.
The June jobs report was extremely depressing, setting the stage for a bummer summer and fueling talk of a second recession. Against this gloomy backdrop, however, the Motor City continues to hire both white- and blue collar workers. Is it possible that the auto industry is running on a completely different track from the rest of the economy? It’s starting to look that way.
It’s a micro-recovery!
The Car Connection provides a snapshot of Detroit’s hiring spree:
In all, since the Chrysler/GM bailout fiasco of June 2009, the U.S. auto industry has hired roughly 77,000 workers. The sector’s total number of employees now hovers near 700,000 — nowhere near the highs of 1,000,000 last seen in 2007, but well up from 2009’s low point of 623,000. And that’s to say nothing of parts and manufacturing jobs, both of which have also seen steep increases in workforce numbers.
And it isn’t limited to Detroit — the so-called “transplants,” foreign carmakers such as Honda and BMW who operate plants in the U.S., are also hiring. As The Car Connection’s Richard Read points out, this is all happening at a time when incentives to buy new cars — price discounts, in other words — are basically invisible.
Meanwhile, in the rest of the economy…
You cans see why the GOP has been assailing, retroactively, the 2009 government bailouts of General Motors (GM) and Chrysler: Because they’ve paid massive dividends in terms of providing…well, pretty much the only momentum the economy currently has (even the rest of the stalwart manufacturing sector has begun to flag).
Let’s unpack this. The only meaningful consumer demand in the economy, outside electronic gadgets manufactured in China and overpriced startup IPOs made in Silicon Valley, is in autos. For the most part, people don’t take out a large loan to buy an iPhone, but they will finance a Chevy Cruze or a Ford (F) Explorer.
With the housing market completely in the toilet and headed for the sewer, this is the only movement we’re seeing in lending. Banks are sitting on the money they’ve received from the Fed in QE2, not providing the stimulus that’s needed to get small businesses adding jobs.
Brand new car, brand new job!
You could argue that the banks don’t want to lend because demand is so weak (and the ideologically deadlocked Congress isn’t going to allowed another Keynesian juicing of the economy, with the government stepping in to make up for weak consumer demand).
But demand isn’t weak in the auto industry. The Detroit Big Three have all seen significant increases in sales year-over-year. After staring into the abyss of a 10-million-vehicle market in 2009, they’re on track to enjoy a 12-13 million in 2011.
Ah, the virtuous cycling of Americans building American things in America, and then selling them at a profit to other Americans, who will borrow American money to buy them and pay American interest which can then be productively re-invested in building more American things that will create American jobs.
Shooting rockets at the moon this isn’t, folks. This is how the economy is supposed to work — and create the growth that’s needed to bring down unemployment.
So why isn’t this model being copied?
You wouldn’t usually maintain that the auto industry is recession-proof. But if Great Recession 2.0 does materialize next year — and unless the economy figures out a way to match Detroit’s pace of job creation, it will — there’s a good chance that the car business will continue to be a bright spot.
People need to get around. A car costs a lot less than a house. And there are plenty of Americans who have been rolling in the same ride for far too long now. They’ve held off since 2009. They’ve put another 30-40,000 miles a vehicles that was already sagging under the weight of its odometer.
They’re going to keep on buying. And Detroit is going to keep on hiring. Two years ago in was midnight in the Midwest. But now it’s morning in the this critical part of America.
Related:
- Jobs Report: OK, Now You Can Panic
- Return of the Repressed: There’s No Conspiracy in GM Building Too Many Trucks
- Get Over It! Auto Bailout Naysayers Need to Know When They’ve Been Beaten
- The Auto Industry Bailout Becomes a Political Football
- Hey, Bailout Critics! Nobody Was Going to Buy Broke Detroit Carmakers
Photo: GM Media
