Car prices new and used have been on a year. What’s going on?
Flashback March 11, 2021
Please recall Biden Signs $1.9 Trillion Covid Relief Bill.
This article was originally published by Mish Talk.
- President Joe Biden signed the $1.9 trillion coronavirus relief package on Thursday afternoon.
- The plan, his top priority as president, sends direct payments of up to $1,400, extends a $300 per week unemployment insurance supplement, expands the child tax credit and puts funds into vaccine distribution.
- Democrats passed the legislation on their own in Congress, as Republicans question the need for a major stimulus package while the economy improves.
Unprecedented Jump in Used Car Prices
New and Used Car Indexes Detail
Three Rounds of Fiscal Stimulus
The US federal government sent out three waves of stimulus payments since the start of the covid-19 pandemic in March 2020. Here’s a look back at Three Rounds of Stimulus.
- First round of economic stimulus checks: April 2020 – The CAREs Act included a provision for a round of stimulus payments – eligible tax-paying adults received a check of up to $1,200 while eligible dependents under 16 years of age received $500 each (a maximum of three dependents could be claimed for).
- The second round of aid, a $900 billion package which was part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed off by Trump on 27 December 2020. It provided a one-off check of up to $600, but this time, households were also able to claim an additional $600 for child dependents aged 16 or under.
- On Thursday 11 March, Biden signed his $1.9 trillion American Rescue Plan into law. The third payment provided eligible individual taxpayers for a check of up to $1,400, while couples filing jointly could receive a maximum of $2,800. In addition, families with dependents were eligible for an extra payment of $1,400 per dependent, regardless of the dependent’s age – this time, there was no limit to the number of dependents that could be claimed for.
Why Did the CPI Finally Jump?
Those blaming money supply have the wrong narrative. It was FREE MONEY.
Note those three spikes on that top yellow line. The biggest one was courtesy of the Biden Administration.
Those were three rounds of free helicopter drop money.
The CPI took off after Biden did a massive shotgun blast of free money to nearly everyone.
CPI Index Levels
Helicopter Drop Impact
In previous posts, I stated two rounds of stimulus happened under President Biden. Technically that is true, but the authorization of the second round was by Trump.
The third round of stimulus, Biden’s American Rescue Plan, was tremendous overkill. The economy and jobs were already in a fast recovery. Yet, the overall $1.9 trillion package was the largest by far.
In addition, the Biden administration repeatedly extended eviction moratoriums putting massive amounts of free money into people’s hands. This also ignited inflation easily seen in the charts.
Have Used Car Prices Finally Peaked?
I got a phone call a few days ago from a nearby car Toyota dealer (TD) it went like this.
- Me: Mike Shedlock
- TD: Hi, this is Stephen Wade Toyota
- Me: What’s up?
- TD: Do you still have your Nissan Murano?
- Me: No, I traded it in.
- TD: What did you buy?
- Me: A Toyota 4-Runner, but you ought to know. I traded the Murano in to you.
- TD: Oh, sorry. Do you like the 4-Runner?
- Me: Yes, very much
- TD: Do you want to sell it?
- Me: Uh, no, I like the car.
- TD: Ok.
- Hang Up
Seriously, that was the call. It shows how desperate dealers are for cars. But it also got me thinking: This has to be close to the top in used car prices.
Nancy Pelosi Hoot of the Day “Government Spending Reduces Debt”
Meanwhile, I am pleased to report this exciting news: “Government Spending Reduces Debt.”
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