Auto Industry in U.S. Economy

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As we are slowly recovering from the economic recession, I am glad to learn the fact that the “U.S. auto industry in 2012 has been a major plus for the economy.” However, it is a bit surprise for me that auto industry is actually helping the U.S. economy while, as we talked about in the class, about 1.3 million households out of 2 million household that once had jobs in Detroit had to leave the city due to losing their car related jobs.

GM President Charles Erwin Wilson once said “For years I thought that what was good for our country was good for GM and vice versa.” The facts that GM stock value sharply increased by 42 percent from 2011 and it sold about 2.6 million cars show that GM is probably having one of its best sales during the recession. Also, with the increase in their stock value, GM is hoping that the “repayment” that it paid back for the bailout, which is a mixture of cash and stock, would be enough.

Also there are positive signs for the optimistic future such as low interest rate, quality improvements, etc. If the industry stays strong and remains as one of the key sectors in the economy, then the workers who left their town will come back as well as the economy.

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1 comment to Auto Industry in U.S. Economy

  • Think long term: what happens to productivity over time? if you build a new plant – buildings don’t last forever, when I was in college I worked in a plant that predated Chrysler and was laid out in a way that (for good reason) no plant is today – is Michigan a good geographic location relative to (say) Kentucky? There is a union aspect, but I personally think that’s less central than, well, being central. See the Klier & Mcmillen articles under sakai (and available on the Chicago Fed web site) for maps that tell the story (and 1,000 words or so as a bonus).

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