White House says Cash for Clunkers will stimulate economy, 42,000 jobs expected in 2nd half

Posted: Aug 27, 2009
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Barack Obama - Joe Biden

Cash-for-clunkers has triggered what the White House says could be the biggest two-month spike in auto sales on record. A preliminary analysis submitted to Congress puts GDP estimates at 0.3 to 0.4 percentage points higher at annual rate when compared to what it would have been without the program, reports Automotive News.

This increase “will be sustained in the fourth quarter” because of increased auto production to replace dealer inventory, the White House said.

The need for dealers to replace inventory will stimulate the long-term economy, as 42,000 jobs are expected to be generated during the second half of 2009. Both GM and FoMoCo have announced plans for increased production during the second half of the year to replenish inventory depleted by clunkers.

The White House also predicts long term environmental benefits, as there will be more cars on the road with better emissions output ratings. The average fuel-economy of a new vehicle purchased was 24.9 mpg – a 58 percent improvement.

-By: Stephen Calogera

Image Source: Pete Souza


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  • zermatt

    Having toured a couple of dealers lots of their clunkers collections, there have been a huge number of TURDS taken off of the road. I can only hope that the replacement vehicles will be better cared for than the ones that were traded in. The resulting improvement in fuel economy is a great outcome.

    It is, however, a no brainer that people would be happy to go into debt when the government is giving away $3,500 to $4,500 of taxpayer money. Rebates, 0% financing, C4C, etc. has trained consumers to wait for incentives to buy vehicles. If the government had offered that money kind of money to all drivers there would have been even more cars sold, but we will have to wait until after the start of the new year to see that proposal.

    The jobs increase will be followed by layoffs to match. I think that Ford and GM have miss-judged the sales increase as a sustained increase when it will not. C4C part 2 or some other government plan cannot be too far off…

  • zermatt

    Having toured a couple of dealers lots of their clunkers collections, there have been a huge number of TURDS taken off of the road. I can only hope that the replacement vehicles will be better cared for than the ones that were traded in. The resulting improvement in fuel economy is a great outcome.

    It is, however, a no brainer that people would be happy to go into debt when the government is giving away $3,500 to $4,500 of taxpayer money. Rebates, 0% financing, C4C, etc. has trained consumers to wait for incentives to buy vehicles. If the government had offered that money kind of money to all drivers there would have been even more cars sold, but we will have to wait until after the start of the new year to see that proposal.

    The jobs increase will be followed by layoffs to match. I think that Ford and GM have miss-judged the sales increase as a sustained increase when it will not. C4C part 2 or some other government plan cannot be too far off…