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

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