Why I Think A Recession Is Coming

The Dow is up again, there might be another rate cut from the Federal Reserve, and Donald Trump (below) assures us that there won't be a recession.

But I think that a recession, which is the only thing that could solidly sink Trump's re-election chances, is still coming.  I could write a six-thousand word explanation, but as it's been said that one picture is worth a thousand words, I am instead showing you six pictures, all of which I took myself this year.

This is a 2007 Volkswagen Jetta.

Here's another Volkswagen, a 2002 Passat.

And here's a 2003 Dodge Neon.

Here's a nice, though slightly banged up, 1999 Saturn SL2.

 And how about this sleek 1997 Lincoln Mark VIII?

And - wait for it! - a 1995 Ford Taurus - first-generation model! 

In case you haven't figured it out yet, here's what these six cars have in common.  All of them over over a decade old, a couple of them even more than two decades old.  One of them is even from a brand that no longer exists.

I've been seeing cars ten or more years old on the road almost daily, and many of them have license plates that were issued only recently.  Part of the reason for this may be that many people don't like any of the new sport utility vehicles and crossovers and prefer to keep their old coupes, sedans and hatchbacks, but I suspect that a bigger reason may be that new cars are simply too damn expensive for the average buyer.  Many of the new jobs created in Trump's economy are the same old dead-end jobs that barely helps a beleaguered American middle class make ends meet.  Meanwhile,  automotive journalists have suggested a theory - which I happen to agree with - that the reason cars have become too expensive is because of all the high-tech gadgetry in them that most people don't want or need.  Even entry-level brands such as Chevrolet and Toyota are filling their cars with so many unnecessary high-tech features, you might as well buy a Cadillac or a Lexus.

This all means that people are either holding on to their cars longer or buying used cars that other people held on to for long.  I have a friend who owned a 2006 Volvo that he traded in for another car only recently.  He got a 2016 Volvo in its place, and as an owner of a late-model used car, he's one of the lucky ones!    

The health of the American auto market - not just domestic automakers but of all of them - has long been a barometer for the U.S. economy.  Car sales - sales of all cars, sedans and SUVs alike - are slowing, and the Web site Insider Car News reports that there are still plenty of 2018 models available as the 2019 model year comes to a close.  The Jeep Wrangler Unlimited is the 2018 model with the largest surplus of unsold units, followed by the base Wrangler.  Most of the other 2018 models available in surplus are SUVs as well, despite the fact SUVs account for more than half of new vehicles actually sold.  This news comes on the heels of factory closures and layoffs from General Motors back in late 2018.  You call this a robust economy?

I have been looking at the possibility of getting a new Golf before Volkswagen of America decides not to offer the standard Golf model here anymore, as my own 2012 Golf has stalled repeatedly over the past few months.  But I've also been looking at used Golfs for purchase, because I'm no better off financially than most people.   After yet another repair, I think I may have finally had my stalling problem licked, so I may yet be able to keep my Golf like I've wanted to.  And I have a feeling others will continue to buy or hold onto cars older than mine.  If you hang around a polling place on Election Day 2020, and you see a lot of cars from the 1990s and 2000s - some of which may be from Pontiac, Oldsmobile, and other since-shuttered brands - pull into the parking lot, count on Trump to lose his bid for a second term.  Even if some of those vehicles are Suburbans and Explorers of similar vintage.    

Saturn Falls

A venture that started as one of the boldest and most ambitious experiments in the American automobile industry came to a crashing end this week as Saturn burned out. Roger Penske, who had hoped to buy the brand and its dealer network from General Motors, abandoned his effort after failing to find another manufacturer to supply cars to replace the GM-built models upon their discontinuation.

Penske had been in negotiations with a foreign automaker - possibly Renault or its Nissan subsidiary - to sell cars currently unavailable in North America and also build them in North American plants, which Nissan has. He thought he had a deal with this unidentified company, but it all unraveled just before his acquisition of Saturn seemed to be in the bag.

Of course, Saturn had long since lost its edge in its brief history. The project had been started by GM chairman Roger Smith as an effort to build a solid small car that could compete with imported cars in the U.S. market, using innovative ideas and fresh thinking that would break with the conventional Detroit way of doing things. To preserve the bold, fresh mindset Smith wanted, the project would not produce cars for existing brands but be a new subsidiary company altogether. Smith named it not after the sixth planet from the sun but after a NASA rocket project in the sixties.

After numerous delays, the Saturn Corporation was finally launched in 1990 with a single model line, built in Spring Hill, Tennessee, by workers with a special contract with General Motors. Although many observers thought that the project was too overambitious, trying to start too much from scratch, Saturn's S-Series proved to be a popular car, and the company's approach to marketing and service was refreshing. The no-haggle pricing appealed to customers, and dealership events that treated customers like family - memorably satirized in an episode of Ellen DeGeneres's mid-nineties sitcom - became commonplace. Saturn's dent-resistant polymer body panels, easily accessible fluid reservoirs, and distinctive styling gave the brand an edge over the competition, and it featured the most sophisticated overhead-camshaft engine a GM brand had ever produced. By the end of the decade, a larger midsize model - the L-Series - had been added, and a three-door coupe, with a small rear side door, was available.

Several weaknesses had already become obvious by then, though, as Saturn tended to take sales from other GM brands more than from the imports they were supposed to compete with. Quality was better than other GM cars but still not as good as the Japanese competition. Then, in its second decade, Saturn managed to water down its advantages with a succession of bland models and a muddled identity as it became more integrated with its parent company, ruining everything that made it a breath of fresh air in the first place.

Saturn's biggest mistake was the Ion, which replaced the S-Series. Its design and ergonomics were so bland and uninspiring that it turned off potential customers while disappointing the brand's early admirers. Later models like the midsize Aura and the Sky sport coupe were obvious variations of product available from other GM brands. The final insult came when the Ion was replaced by the Opel-built Astra. Saturn had been founded to prove that Americans could build a good small car. Now its small volume car would be outsourced from a plant in . . . Belgium. The car was an unqualified failure, being overpriced due to currency rates and underappointed for American tastes.

Oh, and what happened to the Spring Hill plant? The special contract was terminated in 2004, and the factory was retooled to make other GM vehicles . . . only to scheduled to be closed later this year.

This is the ultimate humiliation for a once proud industry, not to mention an embarrassment for a country that once made the best consumer products in the world. To give you a perspective of how short a time Saturn will have lasted - twenty years - Hyundai, which competes in the small and midsize car market with Saturn, began selling cars in the U.S. in 1986 and continues to expand.

It's getting to the point where we can't even make any consumer products, never mind making the best. It seems ironic that Saturn should have been named for a a project from the glory days of the space program. If NASA in the 1960s were anything like GM is now, the Soviets would have reached the moon first.

A different kind of company became the same old song and dance from a dying, disrespected auto industry.

What caused the Penske deal with another car company to fall through? Who knows? Maybe someone who could have swung the deal in Penske's favor, at a critical moment, had JujyFruits stuffed in his mouth. ("Seinfeld" fans will get that joke.)