This week’s insight shifts gears from the housing market last time to what’s going on in the auto industry.
Where do we begin? The United Auto Workers continue their targeted strikes, used car prices are easing, and the costs of repairs and insurance remain through the sunroof. With the summer driving season having come and gone, workers are back in the office more days per week while the kids are in the classroom swing of things with Halloween already approaching. We noticed just the other day that, according to the Federal Highway Administration, Americans are spending more time on the roads (over the last 12 months) than at any point since early 2020.
More Miles, More Money!
Meanwhile, retail gas prices are near record highs for this part of the calendar – typically, the autumn (happy fall y’all, by the way) sees a downtrend in fuel prices. This year, a tight supply/demand situation, caused by a variety of factors, including the Saudi’s crimp on production and the US having already drained the Strategic Petroleum Reserve (SPR), has resulted in $4-plus pump prices for many (even reports of $7 or more in California). Fortunately, we live near the Gulf Coast – the heart of oil production and energy refining activity (low taxes helps, too!). In Florida, the average cost of a gallon of regular is around $3.60, with cheaper prices here in Destin.
Families with teenage drivers to insure know where the real financial gut punch comes from: insurance. Economists track this within the monthly Consumer Price Index (CPI) report. The latest gauge revealed a stunning 19.1% yearly rise in the cost to insure a vehicle.
Car Insurance Inflation: Zoom Zoom
Recall during the COVID lockdowns that some car insurance companies actually reduced premiums due to fewer folks hitting the highways. That brief trend has taken a U-turn, with rising auto repair expenses, a surge in accidents (largely due to texting), and, regrettably, an uptick in traffic-related fatalities, all culminating in larger insurance premiums. And the thing about price rises for goods and services is that they rarely come back down, so it’s prudent to pencil in larger car insurance premium costs in your budget going forward. Your emergency fund should include the reality of higher auto repair bills, too.