Used Car Prices In The US Are Up Nearly 50% This Year, Beating Bitcoin

In a context of rising inflation and the impact on global commodities, the US economy is surprising. Used vehicles, which must be reduced, benefit quickly. Jim Bianco, president and macro expert at Bianco Research Corporation (Bianco), noted that car prices have increased faster than Bitcoin and other assets.

“If you want to know the best investment in 2021, look at the car in the driveway or in the parking lot,” Bianco said in a recent interview. "He did better on the stock market and recently completed some cryptocurrencies."

Bianco's rating is based on the Manheim Used Car Price Index, which aims to track market prices.

“Used car prices have risen by more than 20% in the past four months. Not only have they outperformed the S&P 500, but they have also outperformed Bitcoin. As of December 15, the data on The New Model we have shows that car prices continue to rise. "At the moment it is not increasing," he said.

Over the past four months, the value of Bitcoin has increased by 5%, while the S&P 500 has risen by 5% in the same period, with an increase of 27% this year.

Bianco mentions two important factors in the used car industry.

Car prices in the United States have been steadily falling, according to a report by automotive measurement and research firm Kelley Blue Book. The median price for a new car in November was $ 46,320, and the average price for a used car was $ 27,569, up 27% from the same period last year.

The second big factor that drives up car prices is that people want to try and resell cars. “What we are seeing in the used car industry is that people are rushing to buy and guess. It will get more and more expensive, so buy now,” Bianco said.

bubble sign

“All signs are showing that this is a bubble. Used cars are considered a low value item. Prices are not expected to rise. But prices have risen 49% this year, nearly 50%, ”he said.

Bianco thinks rising car prices are a bigger problem. "This is something they (the Fed) don't want to see, because it is a self-sustaining inflation strategy."

The US PCE rate index rose 5.7% year-on-year in November, according to data released by the US Department of Commerce on December 23 and more since June 1982. It has largely exceeded the target of the Fed by 2%. The Consumer Price Index (CPI), first released by the US Department of Labor, also hit its highest level since 1982.

Bianco warned in December that 2021 would be the first generation of Americans to experience new inflation. He now believes inflation will come down in 2022, but prices will fall slower than most people think.

When car prices go up, Bianco thinks everyone's estimates are different. “This situation can last for over a year or it can go up to two weeks. All the work that we are seeing now can be a bubble.”