High Gas, High Car Sales, Lower Unemployment… But Not for Long!

Gas prices have been slowly creeping up over the weeks, landing at their current average of $3.29/gallon, which analysts say is only a stop off from its final destination of upwards of $3.50 to $3.75. This is the time of year that gas is usually at its lowest, but continued unrest in the Middle East and North Africa are pushing oil prices towards the $100+ barrel range, which is bound to have several repercussions.

For one, reported car sales for the month of February were quite good. Ford, Chevy, and Toyota all received tremendous feedback in the market. Overall, this last month produced a whooping 27 percent mores sales, compared to the previous February (2010). A few of the preferred vehicles consumers were snatching up, were the gas efficient compacts and hybrids, such as the Ford Fiesta and Toyota Prius.

Truck sales also remained relatively high due to a gradual economic recovery, which has pushed many businesses towards upgrading their existing fleets to keep up with the demand in consumer sales. The unemployment rate has made a noticeable recovery, as well.

Unemployment in the U.S., which is currently at 9 percent, dropped 0.4 percent since this past December (2010). This is where the good news ends, and the waiting game begins. Analysts predict continued increase in gas prices will slow the recovery process, from its current 3.7 percent growth rate to 3.4 percent, which could negatively effect unemployment rates and car sales for the coming year.