The big economic headlines scream about a better jobs picture, one-time bonuses and a ginormous rally on Wall Street. All good things that could keep driving car sales.
But untold stories of economic anxiety cloud the picture, too.
Jacob Zolynsky, 29, received a $1,000 one-time bonus from AT&T in late December. A little more than a week later, he was laid off. AT&T put out a press release about the bonuses but isn't disclosing how many workers lost jobs.
Zolynsky, who lives in Royal Oak, Mich., worked as an installer for U-Verse for about two years. He graduated in 2012 from Central Michigan University with a bachelor of applied arts degree, said he has had a few leads relating to customer service.
And he remains optimistic enough to do a little dreaming about cars and trucks. Zolynsky was eager to see the new 2019 Chevy Silverado when visiting the Detroit auto show this month with his wife, Marina, who works as a nurse practitioner, and their 14-month-old daughter Montana.
His lease on a 2016 Silverado and her lease on a 2017 Dodge Journey end next year. They'll just have to see what happens between now and then, they say.
"I'm being patient," he said. "It's not freak-out time yet."
Deciding to buy a car often boils down to having the extra cash, the credit and the job security to feel comfortable enough to make a deal.
But it's a mixed economic bag, where some consumers are doing very, very well and others remain hopeful that the economic recovery hangs on long enough to grab them on board.
While much news is good, businesses, including major retailers, continue to restructure and let go of some employees, all of which could influence car sales going forward.
AT&T will not provide total numbers or locations of its job cuts, according to company spokesman Marty Richter.
AT&T said it's adding people in "many parts of our business that are experiencing higher customer demand." But "there are some areas where demand for our legacy services continues to decline, and we're adjusting our workforce in some of those areas."
Tina Culver, president of Communications Workers of America Local 4009, said 245 union members in Michigan lost their jobs in early January. Nationwide, she said, the CWA said more than 1,600 AT&T employees were laid off.
"It would have been an easier pill to swallow with bonuses, if nobody lost their jobs," Culver said.
The good news for the auto industry is that many consumers are cashing paychecks with the U.S. jobless rate at 4.1 percent in December. And many lower-paid U.S. workers are expected to see higher wages in 2018.
In Michigan, for example, JP Morgan Chase said wages will go up for more than 860 eligible employees. The increased minimum hourly pay rate will be either $15 an hour or $16.50 an hour, based on location. These Chase employees had been paid $12 an hour.
Comerica, Fifth Third Bank, PNC and others plan to increase their minimum wage to $15 an hour. That's higher than Michigan's minimum wage of $9.25 an hour -- which took effect Jan. 1.
One-time cash bonuses of $1,000 or more were announced by many employers following the passage of the federal tax bill in December. Companies handing out bonus money include PNC Financial Services, Comerica, Citizens Financial Group, Comcast, Bank of America and Fifth Third Bank.
Fiat Chrysler Automobiles announced plans to hand out one-time $2,000 bonus checks to about 60,000 U.S. workers.
Car sales -- while expected to pull back from last year's levels -- aren't expected to tank in 2018, thanks to the overall strong jobs picture.
Atlanta-based Cox Automotive is projecting that 16.7 million new cars and light trucks will be sold in the U.S. in 2018. That's down from 17.1 million vehicles sold last year.
Vince Audet, 44, who lives in Macomb Township, said after driving a Dodge Journey for nine years and 200,000 miles, he decided to get a 2018 Dodge Ram and bought one last Friday.
He's leasing the pickup, which had a sticker price of about $50,000, for $325 a month. He had hoped to get an advertised deal of around $120 a month -- but he didn't qualify for a lease loyalty program, a military discount or other incentives.
Audet, who works as a manager in engineering at FCA's U.S. headquarters in Auburn Hills, said he was happy to hear Fiat Chrysler CEO Sergio Marchionne say at this year's auto show press preview that he has no intention of selling off the company in pieces.
"We're doing great," Audet said. "I'm feeling really good."
Yet some consumers with less job security and weaker credit may feel more compelled to buy a used car, instead of new.
"Credit is tightening at the same time interest rates are going up," Jonathon Smoke, chief economist for Cox Automotive, said in an interview at Cobo Center during press preview days at the Detroit auto show.
A subprime borrower -- defined as someone with a credit score below 600 -- taking out a new car loan was looking at an average rate of 15.91 percent in October 2016. But a year later, the average rate had climbed nearly a full percentage point to 16.84 percent, Smoke said.
On a five-year, $15,000 car loan, the monthly payment for the subprime borrower would be about $7 a month higher and around $371 a month at 16.84 percent.
Many subprime borrowers can no longer get car loans as credit tightens.
Overall, auto financing has remained strong, according to data from Experian. But the origination of new car loans for subprime borrowers hit a record low, according to Experian's data through the third quarter.
Smoke said he would expect more consumers with weaker credit to turn toward newer used cars in the next few years to hold down their monthly payments. Some might need to save up more for a down payment, as well.
Many consumers often focus on the monthly payment and just take out a longer car loan when rates climb higher. But the length of loan terms -- averaging around 69 months -- has somewhat plateaued, so extending that loan even longer to lower the monthly payment may not be an option as banks tighten credit, Cox Automotive experts said.
Low car loan rates still exist, even though the Federal Reserve raised short-term interest rates three times in 2017. Another three rate hikes are expected for 2018 and possibly two more hikes in 2019, Smoke said.
Nationwide, the average five-year new car loan rate is 4.49 percent now, compared with 4.35 percent one year ago, according to Bankrate.com.
Some credit unions and banks are even advertising rates at 1.75 percent or so. But again, the best car loan rates go to customers with the best credit scores.
Michelle Krebs, senior analyst at Autotrader, said affordability continues to be a challenge for many people, in part because wages have only begun rising for many households following the recession.
Consumers who borrowed money by tapping into variable rate loans will now face higher rates on those loans as the Fed raises rates. Payments will go up on credit card debt and home equity loans. Many families, Krebs said, will continue to focus on what they can afford for a monthly payment when shopping for a car.
How people feel about their finances, of course, will continue to greatly influence how they spend any extra cash from wage gains or even one-time bonuses.
Tim Dawkins, 32, said he'll probably use his $2,000 bonus from FCA toward custom wheels and tires for racing his car at Lapeer International Dragway in the spring.
Dawkins, who works as an electrician at Sterling Stamping Plant for Fiat Chrysler, said he feels very secure about his job, especially given the automaker's investment in the Sterling Heights plant.
Dawkins bought a white 2018 Dodge Charger, which has a 6.4-liter Hemi V8 engine, in May. Its sticker price was about $41,000. And he pays about $600 a month -- a loan payment that's roughly twice what some friends pay.
"I technically just didn't care. I wasn't hurting. So I got it," said Dawkins, who lives in Detroit.
About The Writer
Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at email@example.com.
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