For the first 7 months of 2022, the annualized rate of new vehicle sales declined by -11% to 13.8MM. More notably, sales are now off by -21% from pre-covid levels when the industry was selling between 17-18MM cars on an annualized basis. This is key because “as Detroit goes, so goes the nation”. While a decline in car sales is certainly a reflection of higher car prices, it is notable that this is driven by a supply shortage which explains the associated huge spike in used car prices (that is all that has been available to most consumers post-covid). Once again, this illustrates how our current bout with inflation is a function of supply shortages as opposed to an over-heated economy. Fed rate hikes will not increase the supply of autos for sale, they will just depress the ability of consumers to afford new car purchases. This may lower car prices, but likely at the cost of crippling the car manufacturers who had to be bailed out by the government during the Great Recession when vehicle sales were closer to a 10MM run rate.