AutoNation CEO says U.S. needs more rate cuts
By Poornima Gupta
DETROIT (Reuters) - Car dealership group AutoNation Inc (AN.N: Quote, Profile, Research) Chief Executive Mike Jackson said on Sunday the U.S. economy needs additional interest rate cuts by the Federal Reserve of at least 150 basis points to avoid the danger of recession.
“The Federal Reserve has been slow in recognizing the seriousness of the situation,” he told Reuters on the sidelines of the North American International Auto Show, adding that the U.S. economy “needs a fiscal stimulus package.”
“Another 150 basis points of cuts are needed over the six to nine months,” Jackson said.
The benchmark federal funds target rate is currently at 4.25 percent.
Jackson, who runs the largest publicly-traded car dealership group in the United States, said the economy is a “challenge” right now and is hurting auto sales.
“The traffic (in dealerships) is holding steady, but the purchasing power of consumers has (been) reduced because of economic distress,” Jackson said. “It’s more difficult to put them in a car.”
U.S. auto sales have been hurt by the weak housing market, gasoline prices and tough competition. Weak housing starts have also sapped demand for high-margin pickup trucks, which are typically bought by construction workers.
Some analysts have forecast that U.S. demand for light trucks and cars could dip below 15.5 million units on an annualized basis over the next six months. Continued…
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