This section of Tallahassee Reports, Industry Profile, will take a look how a specific industry has fared before, during, and after the Great Recession. Which industries have recovered or on their way to recovering? Which industries are still lagging behind? And how does all this effect our local economy. The first installment will look at the automobile industry and how car sales have changed over the 5-7 years.
Auto sales are a significant part of the local economy. In Leon County in 2012, auto sales accounted for just less than 11% of the $6.7 billion in goods and services sold.
Also, economists view auto sales as a leading economic indicator. This means auto sales are likely to fall before the economy is heading into a recession and likely to rise before the economy recovers. This is because automobiles are a high-priced item, so people will spend money on new cars when they think their financial prospects are good.
Conversely, if consumers think we may be heading into a recession and fear company slowdowns or layoffs, they will not purchase cars.
How have auto sales performed over the last seven years? Using data from the Florida Department of Revenue, the chart to the right was produced by graphing auto sales for each year from 2007-2012. Data for 2013 was projected using information for the first 9 months of this year.
The chart shows that auto sales began falling in 2007 and did not start to recover until 2010. From 2006 to 2009, auto sales fell a whopping 40% from $871 million in sales in 2006 to $526 million in 2010.
Also, it appears that auto sales were indeed a leading economic indicator with regards to the recession. The Great Recession officially began in December 2007 and 2008 was the first year that overall sales of goods and services declined in Leon County.
However, auto sales began to decrease one year earlier in 2007.
Auto sales began to recover in 2010 and have increased consistently each year from a low of $526 million to a projected level of $805 million in 2013. Again, sales data indicates that auto sales began recovering from the recession sooner than the overall economy in 2010. In 2010, auto sales increased by 8.73% while the overall sales of goods and services increased by 1.70%.
What does this mean for the future?
Gross sales of goods and services are expected to increase by greater than 6% in 2013, the largest increase since the recovery began in 2010. Auto sales are projected to increase by 8.4%, a significant increase, but less than the previous three years.
It appears that 2014 will be the year that auto sales and gross sales of goods and services reach and possibly surpass pre-recession levels of activity.