Ford Motor just announced quarterly profits of nearly a billion dollars.  So, that’s it.  The recession must be over.  Time to pop open the champagne bottles.

You no doubt detect more than a hint of sarcasm in my words.  Yes, Ford’s results are good news for the company’s shareholders.  Ford managed to claw some market share away from its domestic rivals — both of whom were distracted by their respective bankruptcies.  Ford also had a better lineup of  fuel-efficient cars, allowing the company to better take advantage of the Cash for Clunkers windfall.

But this is where the celebration stops.  As you can see from the WSJ chart below, even with Cash for Clunkers, car sales are FAR below the levels of the early and mid 2000s.  And now that Cash for Clunkers is finished, sales are beginning to falter again.

The WSJ writes: “Clunker-driven sales peaked in August at a 14.1-million-unit pace, but payback was rough: Sales tumbled in September to a rate of 9.2 million units… Auto makers sold, on average, 17 million cars annually from 1999 to 2007. It might be years, or another credit bubble, before sales get anywhere near such levels.”

The Journal has taken to calling this mild recovery — in which expectations are lowered — the “New Normal.”  This is a term we’ve used quite often of late in recent posts.   And we expect to be using it quite a bit going forward.

Charles Sizemore, CFA
Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy