Two Steps Forward, One Step …

Special to the Star-Telegram

The roller coaster ride continues. Although it’s not making most of us feel as nauseated as it did this time last year, by now the drill is clear.

Oil goes up because of constant, persistently positive economic reporting; two days later oil falls in price because of economic news wasn’t quite as positive the next day. "The car industry is in the process of a full recovery" — assuming that August wasn’t just a sales bump artificially induced by the CARS program. "Factory orders are way up," but shipments of those orders are somehow down. "The housing market is finally showing signs of a comeback" — but foreclosures are picking up and won’t peak until the first six months of 2011. "New jobless claims are way down," but unemployment is way up.

Welcome to the new bipolar U.S. economy. We can’t control our optimism one day, and later that week we wonder when all the negative news will end. Two steps forward, one step back.

Good Omens

Let’s look at some proven realities and see where the improvements take us.

First, car sales last month were the best of the year; and yes, the "Cash for Clunkers" program was the main driver of those additional sales. But that’s not where the new car market showed the greatest strength, because it was artificial; sales were federally induced using CARS as the stimulant. No, the car market improved last month in a market demographic that virtually no one in the media picked up on: A strengthening in luxury car sales, suggesting that one major retail segment in America was in fact enjoying the promise of a genuine recovery.

The products they sell puts most luxury car dealers out of reach of any federal intervention in the car market. Yes, Sewell Lexus of Fort Worth took 14 clunkers in trade, but the Sewell Infiniti store in Dallas took in only two. Yet both stores stated that in August sales started "feeling more like normal." That’s because last month marked the return of the more typical luxury car buyer. The same story was heard at Autobahn BMW.

That’s been a common complaint nationwide among dealers whose offerings are some of the most expensive vehicles sold: Many shopping those car lines this year came into stores frequently and expressed interest in buying — if somehow they could get half off the window sticker price. And that’s not unusual in a major economic downturn; people assume they’ll get impossible discounts on new cars, as if they were bidding on foreclosed homes in California.

Still, the improvement in luxury showroom traffic, the mindset of those buyers in August and the increase in sales from July all suggest that consumer confidence is returning to those in the upper middle and upper class. That’s a hopeful sign, because those two economic classes are always the first ones to regain their optimism. They purchased luxury cars because they wanted a new vehicle. In contrast, those who bought only because the government was overpaying for their old cars are "need" buyers.

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