JESSE SNYDER

Black swans, canaries and coal mines

Jesse Snyder is editor of the opinion page at Automotive NewsJesse Snyder is editor of the opinion page at Automotive News
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Woo hoo! So we're headed for another year of rising U.S. auto sales. Fifth straight, with 2014 back to pre-recession volume. Woo hoo indeed!

But if the Great Recession taught us anything, it's caution. We're suspicious of good news.

So among all the 16 million-plus forecasts strewn about the Society of Automotive Analysts Outlook Conference Sunday was a menagerie of misery: black swans (worst case) and canaries in the coal mine.

What black swan event could ruin the 2014 party? An economic meltdown in China or Europe, says William Strauss, senior economist at the Federal Reserve Bank of Chicago. He worries about the tidal wave of local government debt that China's central economic planners can't control and Europe's shaky euro.

Barclays analyst Brian Johnson worries about a U.S. price war, perhaps launched by one of the Detroit 3 or even Toyota in a bid for market share as growth slows. Kelley Blue Book's Alec Gutierrez also frets about market share battles that could wreck the discipline that has been so beneficial the past four years.

So what early warning signals are folks watching? What are the canaries in the coal mine?

Strauss watches the labor market. He'll be nervous if the U.S. economy trend line falls below 200,000 net new jobs a month.

Edmunds.com analyst Jessica Caldwell fears interest rates rising enough to end the cut-rate auto loans and leases that have fed auto growth. "Without those $199 leases, what about affordability?" she asks.

Johnson tracks new-vehicle inventory. If it swells without matching production cutbacks, that's danger, he says.

Mind you, none of these folks see their nightmare scenarios as imminent, or even particularly likely.

But that's where we are, five years and 5 million annual auto sales removed from early 2009.

Even as we party, we've memorized the emergency exit map.

You can reach Jesse Snyder at jsnyder@crain.com.

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