Used Car Are Prices Up 42 Percent In One Year, Have They Finally Peaked?

By U Cast Studios
March 14, 2022

Used Car Are Prices Up 42 Percent In One Year Have They Finally Peaked
Image Courtesy Of Mish Talk

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.

Key Points 

  • 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 prices from BLS, chart by Mish

New and used car prices from BLS, chart by Mish

New and Used Car Indexes Detail 

New and used car prices from BLS, chart by Mish

New and used car prices from BLS, chart by Mish

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?

Real Income and Spending data from BEA, chart by Mish

Real Income and Spending data from BEA, chart by Mish

Free Money

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

CPI Data from BLS, chart by Mish

CPI Data from BLS, chart by Mish

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.

  • Ring
  • 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.”

Also From the Rabbit Hole

CPI Data from BLS, chart by Mish

CPI Data from BLS, chart by Mish

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