Deep in today's New York Times story reporting Chrysler's anxiety over further interest rate hikes by the Fed was this fascinating gem: "[Chrysler's chief economist, Wynn Van Bussmann] cited...an internal Chrysler study that concluded, contrary to many analysts' fears, that vehicles are as affordable now as they have been in recent years. Mr. Bussmann said that last year 46 percent of American households could afford new cars, compared with 54 percent in 1988 and 47 percent in 1993." In 1988, new car loans averaged 10.85%; in 1993, 8.09%; in 1994, 7.90% (first three quarters).So despite a fall of over 3 points in the interest rate between 1988 and 1994, the share of households able to afford that staple of middle class American life, a new car, fell by 8 point, to well under half; even the modest drop in rates between 1993 and 1994, and the substantial increase in employment, couldn't offset the declining affordability trend. Doug -- Doug Henwood [[EMAIL PROTECTED]] Left Business Observer 250 W 85 St New York NY 10024-3217 USA 212-874-4020 voice 212-874-3137 fax
