Clunkers vs. Christmas
September 3rd, 2009 at 5:21 pm by Eric Halvorson under Eric Halvorson's Blog, Uncategorized
In the last few days, I’ve heard a couple of economic analysts make the same prediction: the success of Cash for Clunkers may lead to slow sales at Christmas. The analysts say many of the buyers of those new cars didn’t have car payments — until now. That means, now, they will have less money to spend for the holidays.
I asked local financial expert Peter Dunn what he thinks of that prediction. Here’s his response:
“Clunkers messed with the natural cycle of supply and demand. Supply and demand will find its balance, therefore there will be a huge period of depressed demand.
On the flipside (per your question) There has been a decrease in the supply of peoples’ disposable income. Therefore the natural balance will be found. That means they will be forced to spend less over the holidays, or they will increase their debt. Either result is an indirect side effect of cash for clunkers.”
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