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The vicious cycle called deflation

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Just another example....



US auto sales, in weak recovery, drop in June



By TOM KRISHER and DEE-ANN DURBIN (AP), 18 minutes ago



DETROIT - Most automakers saw their U.S. sales drop from May to June, a sign that this year's slow recovery in the industry may be stalling.



Consumers are delaying big-ticket purchases because they're worried about their jobs in an environment of high unemployment. Analysts predict overall sales for the industry will drop 10 percent or more from May.



"Consumers are clearly hunkering down in light of the current environment, waiting for signs of a renewed recovery," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.



Sales of General Motors Co., Ford Motor Co. and Chrysler Group cars and trucks fell between 12 and 13 percent from May. Subaru's sales were also down, but Hyundai Motor Corp. bucked the trend with a slight gain.



Hyundai Motor Corp. reported a 4 percent increase from May and a 35 percent jump from June of last year, helped by sales of its midsize Sonata sedan.



Some automakers are still are still predicting a gradual recovery in the last half of the year, and said they weren't too concerned about the slowdown.



"We don't see a significant change in economic conditions. Recent economic news continues to point to a slow recovery with some volatility in it," said Steve Carlisle, GM's head of global product planning.



He said declines in sales to government and rental fleets were a major reason for the sales slowdown from May to June. GM sold 25,000 fewer vehicles to fleets in June, as heavier than usual fleet demand in the first half of the year subsided.



There were glimmers of strength. Sales of GM's four core brands - Chevrolet, Buick, GMC and Cadillac - rose 36 percent over June of last year, helped by strong demand for crossovers and some recovery in pickups. Carlisle said GM sold 115,000 more vehicles in the first six months of this year even though it is phasing out or selling four brands: Saab, Saturn, Pontiac and Hummer.



GM's overall sales increased 11 percent from a year earlier. Still, last June was a relatively weak month as GM headed into Chapter 11 bankruptcy protection and the industry was in the midst of its worst annual sales in 30 years.



Sales of Ford's top-selling F-Series pickup fell 7 percent from May. The company's overall sales increased 15 percent over last June, and were up 28 percent for the first half of the year compared with the same period of 2009.



Chrysler said all four of its brands - Chrysler, Dodge, Jeep and Ram - saw gains over June of 2009, but the company conceded in a statement that there are signs of economic weakness.



"While there is data that shows the economy is starting to recover, credit is not flowing as freely as it used to, unemployment figures are still a concern for many families in the United States, and consumers are being prudent with their purchases," it said.



The industry sales drop from May could be good news for buyers later in the summer. Analysts say if the month-to-month declines continue, automakers will be tempted to expand sales promotions such as low-cost leases, zero-percent financing and cash rebates.



That wasn't the case, though, in June, according to the ************ automotive website. Automakers averaged $2,661 in deals per vehicle last month, down $36 from May and $196 from June of last year.



Weakness in new car and truck sales to individuals early in June accelerated in the second half of the month, according to data collected from 8,900 dealers nationwide by J.D. Power. In the final week, J.D. Power reported that retail sales had dropped 5 percent compared with a year earlier.



Job worries were reinforced Thursday when the Labor Department reported that new claims for jobless benefits jumped by 13,000 last week.



Claims have been stuck above 450,000 since the beginning of the year, raising concerns that jobs remain scarce as the economy recovers from the worst recession since the 1930s.



Other automakers reporting Thursday:



_ Subaru's U.S. sales rose 16 percent to 21,601 in June on big increases in sales of the Outback and the Forester SUVs. But sales fell about 9 percent from May.

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