Rising inflation and elevated borrowing costs in the United States continued to weigh on U.S. consumers in April, even as retail spending and auto credit availability showed signs of resilience, according to the latest Auto Market Weekly Summary from Cox Automotive.
The report said energy prices remained the dominant inflation driver, with gasoline prices rising sharply year over year and broader price pressures spreading into services. Producer prices also accelerated, reaching their highest annual pace since late 2022.
The summary noted that markets reacted by pushing the 10-year Treasury yield back above 4.5 per cent, while mortgage rates remained elevated, adding further affordability pressure for consumers considering homes and vehicles.
At the same time, auto credit availability improved modestly in April. The Dealertrack Credit Availability Index reached its highest level in nearly four years, supported largely by banks. However, the report said risk indicators continued climbing, with loan terms setting another record high and negative equity remaining elevated.
Subprime lending pulled back from March’s multi-year high, although subprime activity remained well above year-ago levels. Longer loan terms and narrowing yield spreads helped offset some of the decline.
Retail sales data also painted a mixed picture. Total retail and food services sales rose 0.5 per cent in April, helped largely by higher gasoline station sales. Excluding gasoline stations, gains were more modest. Core retail sales, excluding autos and fuel, increased 0.5 per cent. Motor vehicle and parts sales declined 0.4 per cent during the month.
The report suggested tax refunds helped support spending through March and April, though that tailwind may fade as energy prices remain elevated.
