Trend 49: The Economy And Auto Parts Sales: Personal Income

Retail sales of auto parts and accessories are influenced by many things in the economy. One component of our sales forecasting model at Hedges & Company is personal income, so for today’s trend we look at how that affects retail sales of auto parts.

Economic analysis: You can see the change in auto parts sales (red line) vs. the change in personal income (blue line) from last year.

This chart shows the change in auto parts sales (red line) and the change in personal income (blue line) from one year ago.

There’s a rather obvious similarity between changes in personal income and auto parts sales, dating back to the beginning of 2003. Auto parts sales bottomed out in late 2009 and it lines up amazingly close to the change in personal income.

The official end of the Great Recession was June, 2009 but readers of our blog know retail sales of auto parts continued to drop in the summer of 2009 and didn’t start to recover until the end of that year.

One concern for 2012 and beyond is the most recent drop in personal income compared to a year ago, so this is a trend we’ll be watching closely in the coming months. We’ll want to see if this continues to be a leading indicator that retail sales of auto parts will also drop through the end of this year.

Personal income is not an economic metric that grabs headlines like unemployment or stock prices, but it has a very important influence on retail sales of our industry, so now you know one thing to watch for in the news. Check back and we’ll continue to cover other important factors that influence retail sales of auto parts.

Tomorrow: Trend 48 and projected sales volume for the service repair industry.