Editor's note: This report has been corrected to reflect that U.S. job cuts in January were the highest in more than two years.
For more than two years, the U.S. auto industry has been an extraordinary case study in Economics 101: The balance between supply and demand.
January illustrated what happens when the market shifts: Supply got better, but the demand that's driven prices and profits since the microchip shortage began is beginning to soften under economic pressure.
U.S. light-vehicle sales totaled 1.04 million last month, an increase of about 4.5 percent over the severely supply-constrained market of a year earlier, according to LMC Automotive, which said that the showing was still the second-weakest January since 2014.
The reasons: High prices, rising interest rates and low incentives are impacting consumers' ability to find a vehicle they can afford. Just last week, the Federal Reserve raised the federal funds rate another quarter point in its ongoing battle to combat high inflation — the eighth time it has hiked the rate since March — which is another factor hurting consumers' car-purchasing power. And U.S. layoffs in January were the highest in more than two years, largely driven by recession-wary technology companies slashing head count.