Aug. 5 (Bloomberg) -- The U.S. economy is poised to emerge from the worst postwar recession as early as this quarter, with manufacturers boosted by the government’s “cash-for-clunkers” program, according to the two biggest U.S.-owned automakers.
The CHART OF THE DAY shows the purchasing manager’s index, the annualized rate of U.S. auto sales and changes in the nation’s gross domestic product. The PMI reading in July was the highest since Lehman Brothers Holdings Inc. collapsed, and the gauge’s trend signals August could be the first month since January 2008 when more manufacturers report improving business conditions than deteriorating.
“Cash for clunkers came at a very, very good time to jump-start the economy,” Mike DiGiovanni, sales analyst at Detroit-based General Motors Co.
, said at a teleconference. The so-called Car Allowance Rebate System, which provides credits of as much as $4,500 for the purchase of a new car when an older vehicle to be scrapped is handed over, ran through most of its initial $1 billion of funding within a week.
“If the cash-for-clunkers program is extended by the additional $2 billion that passes the Senate, it could boost third-quarter GDP by 0.5 percentage points,” DiGiovanni said.
The economy shrank at a 1 percent annual pace from April through June after contracting 6.4 percent in the first quarter. GDP will expand an annualized 1 percent in the current quarter, according to a Bloomberg survey taken last month.
“We’re close to the end of the contraction,” Emily Kolinski Morris, senior economist for Ford Motor Co., said at a separate teleconference in Dearborn, Michigan. “The pace of decline in the second-quarter GDP report was encouraging and, importantly, the inventory cycle apparently is well under way.”