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If you had to point to one culprit holding back the economy over the past 18 months, it would be the auto industry. Supply chain problems like the shortage of semiconductors have contributed to weak economic growth, anemic productivity, rising prices and higher interest rates as the Federal Reserve struggles to control inflation.
While the auto industry still is a long way from normal, the data we’ve gotten over the past month suggests it is finally healing, which is going to lead to some surprisingly good economic numbers over the next few quarters. We’re already seeing economic growth accelerate at the same time inflation is coming down.
The chart of seasonally adjusted automobile sales shows how far from normal the industry has been since the onset of the pandemic. In the years leading up to the pandemic, new vehicle sales were consistently in the range of 17 million a year. They plunged in March…