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Second, substantial changes in the structure of consumer demand created a swift, but challenging recovery.5 Specifically, a broad shift in consumer demand from services to goods led to a faster-than-expected recovery in the demand for light vehicles in the second half of 2020. Car dealerships suddenly got a lot busier and the waitlist for new vehicles got longer. Light vehicle sales rose to near–prepandemic levels of 16.3 million units (at an annual rate) in September 2020. At the same time, auto producers and parts suppliers found it difficult to increase production due to just-in-time production principles and uncertainty in the availability of key parts.6 A relative shortage of semiconductors—an inexpensive but essential component of autos—exacerbated this production delay.7 With new cars unavailable, consumers turned to used cars and trucks, leading to a dramatic spike in used car prices.8 Despite the disruption in auto manufacturing, light vehicle production exceeded prepandemic levels in July 2020. The gray shaded area in figure 4 shows the V-shaped recovery in 2020—after sharp declines in April 2020, both sales and production rebounded to near–prepandemic levels between July and September 2020. Supply chain challenges restrained recovery in 2021While 2020 was incredibly volatile and unprecedented for autos, the demand-production gap saw only a mild recovery in 2021 (green shaded area in figure 5). Consumer demand for autos rose in 2021 and light vehicle sales reached a multiyear high of 18.3 million in April. On the supply side, production was slightly lower than the prepandemic level. Overall production in 2021 lagged sales by 6.1 million, lower than the 6.4 million deficit in 2019. This shows that the major deficit in supply came from imports, rather than from domestic production. Imports of automotive vehicles and parts declined for three straight quarters between Q1 and Q3 2021. Light vehicle sales also declined for five straight months until September 2021, after peaking in April 2021. With fewer cars at dealerships, auto inventories continued to remain under intense pressure. In December 2021, domestic inventories were nearly depleted at 115,000 units—only 20% of the prepandemic level. Supply chain pressures impacted the auto industry in distinct ways—production did not decline much, consumption fell more, and imports dipped. Thus, in the National Accounts, motor vehicle output declined less than spending on motor vehicles. The decline in real motor vehicle output in 2020 accounted for 0.4% of 2020 GDP. To put the potential impact on GDP in context, had the pandemic not occurred, and motor vehicle output not fallen, real GDP would have been 0.6 percentage points higher in 2021. Meanwhile, the decline in light vehicle sales in 2020 accounted for 0.6% of total consumer spending in 2020. The potential implication of lower vehicle sales on consumer spending was higher—Had light vehicle sales clocked in at the 2019 annual rate of 17 million units in 2020 and 2021, consumer spending would have been US$150 billion higher, equivalent to 1% of consumer spending in 2021. A few dents in near-term recoveryIt’s still too early for automakers to shake off pandemic blues as vehicle sales and production continue to be constrained by low inventory and supply chain disruptions. According to forecasts by IHS Markit, light vehicle sales are expected to reach 15.5 million units in 2022, slightly higher than the 2021 level of 15.1 million units.9 Two factors are key to the industry’s near-term recovery. First, the auto sector may continue to benefit from the shift in consumer spending patterns. Factors that contributed to the initial rebound in auto demand in 2020, such as the preference for personal vehicles as a safe mode of transportation, may boost demand.10 Lower borrowing rates provided additional incentives, but the winding down of economic support by the Federal Reserve and the expected rise in borrowing rates might hold demand back, although “pandemic savings” will lend some support to the existing pent-up demand.11 Second, while there are no quick fixes to supply chain disruptions, early indications suggest that supply chain problems are starting to abate. The Global Supply Chain Pressure Index, developed by the New York Federal Reserve, suggests that elevated global supply chain pressures may have peaked and might start to moderate going forward.12 Another gauge called the Ocean Timeliness indicator, which measures the timeline of a shipment starting from the exporter’s warehouse to its destination port, reported that shipping times from Asia to the Transpacific, while historically high, dipped by one day to 113 days.13 Other related indicators such as Taiwan’s surge in semiconductor exports (Taiwanese firms account for 92% of leading-edge semiconductor production) and a sizeable decline in the Baltic Dry Index in January 2022 also point to an improvement in the supply chain.14 Supply chain pressures may appear difficult, but it is precisely these types of problems that US manufacturers excel at solving. LeisureLife is interested in how the automobile has impacted society.  The Impact of the Automobile Aaron Huber The invention of the automobile has brought more positive and negative effects than any other invention throughout transportation history. As the most widely accepted method of transportation, cars have changed the way people live all over the world. They have affected all aspects of society such as family life, the economy, and even the environment. It is hard to find a movie, book, or TV show that does not have some type of automobile in it. The advancement of automobiles over time has directly affected the advancement of society as a whole. Over the generations, automobiles have influenced every aspect of society in many ways and have changed to keep up with the times. The first mass-produced automobile became publicly available in the 1920s. “In a world where heading to the grocery store is three miles East and thirty minutes away, the need for improved transportation was in demand” (Elliot 1). With the development of suburbia, cars made it easier for people to travel in this world, which was beginning to spread out at a rapid pace. They quickly gained fame as the new and fast way to travel. In the beginning, automobiles were considered to be a luxury, but as they became more mass-produced, more people were able to afford them. Changes that were made in the manufacturing process lowered the cost to the point where the average American could own a vehicle. Ford’s main goal with his assembly line was to make sure that the Model T would be available to a majority of the public. His low production cost enabled the final cost of the car to be lowered as well. “Between 1900 and 1920 Americans went from owning 8,000 cars to owning 8,000,000” (Hess 4). This was largely in part because of lowered production costs. The more widely used automobiles became, the more they began to affect the daily lives of Americans. During this time suburbs were also becoming popular. The automobile played a major role in the spreading out of these suburbs. It heavily influenced family life and made for a more mobile society. The role of women in society was also affected by the automobile. “The urban housewife of 1925 who could do well without a car was transformed into the suburban housewife of 1960 who required a car to do all her shopping or to pick up the kids after school” (Hess 9). It was unnecessary for women who lived in the city to own cars because they lived within walking distance of everything that they needed. Growing suburbs meant that women needed a comfortable and fast way of transportation. Women were not just limited to the house anymore. They could escape their normal jobs at home, and go into the “cultural scene” (Hess 9). Now, women were not limited to their domestic roles any longer. They obtained more gender equality by competing with men for the same types of jobs. Automobiles helped change the role of women in society. A Family Driving a Model T At the time, cars were the cool new thing to have. However, there were negative effects brought on by the introduction of automobiles. Old fashioned beliefs of family and unity were forgotten. Anyone could escape from their current surrounding and go off on personal endeavors. People became more independent because, “Individual family members could act upon their own wishes, rather than the dictation of the family as a whole” (Elliot 2). As people began to spend more time on the road than in their own homes, business-minded individuals such as Ray Kroc took advantage of the situation by opening up fast-food restaurants. Ray Kroc bought a six-restaurant chain named McDonald's and opened up the first modern-day Mcdonald's in Des Plaines, IL in 1954. Today, Mcdonald's is still around and can be found all over the world. The idea of creating a drive-through restaurant was sparked by the popularity of the automobile. Other modes of transportation had to be pushed aside in order to make room for the more comfortable and convenient automobile. Bicycles, railroads, and horses were among the most affected by the automobile’s sudden popularity in the 1920s. Bicycles were being used since the 1890s as a more efficient means of transport than walking. Bicycle usage dropped significantly with the invention of the automobile. However, the most widely used method of transportation before the onslaught of automobiles was the horse and carriage. Unfortunately, from 1915 to 1930, the average farm’s horse population decreased by a third (Young 4). A benefit of getting rid of the horse and carriage system was that the cities became cleaner. Horses used to clutter up the city streets with their foul manure. Now, the streets were manure-free and people thought that the automobile was making their cities cleaner. Another valued method of transportation during this time period was the railroad. Trains were used to transport people and cargo long distances across the country in a short period of time. As soon as automobiles became popular, trains saw a decline in passengers. Because of the automobile, railroad passengers decreased by 40% from 1920 to 1929 (Hess 4). Railroad companies started to overlook the passenger aspect of the railroad and focused more on cargo transportation. When airplanes were invented, the railroad became squeezed in the middle. People began to use planes for longer trips and cars for shorter trips. Today, trains are still mainly focused on cargo. The passenger trains of today are equivalent to that of a fast bus with no traffic. The automobile’s first growth phase ended with one car per family, but the second growth phase ended with about one car per person. During the '60s there was a 25 million increase in car registrations (Hess 10). Car engineers now focused on making the car more efficient, because the regular A to B car was already invented. A major update added to the options of cars was the air-conditioning. People could now spend hours in their cars on hot days and not have to worry about the heat. The temperature of the car could be changed with the touch of a button, and people enjoyed being able to control this. Car innovators looked for small details of a car that would possibly make the passengers feel more comfortable. The more comfortable and suitable the car was for your travel needs, the more popular it was. During this generation, people began to take more pride in their vehicles than ever before. Some people wanted the fastest car and some wanted the prettiest, but all drivers had one thing in common. They used their cars for fun and not just as a tool of transportation (Hess 9). People would pile in cars with all their friends and cruise for half of the night because gas was so cheap. Car enthusiasm became more popular with each passing year. Drivers took pride in the size of their engines, which could be tuned to have more power than a modern-day Ferrari. Drivers weren’t the only people benefiting from automobiles. Automobile manufacturing companies were hiring workers to put together the cars. This created numerous jobs in the U.S. “Employment by firms engaged in motor vehicle and equipment manufacturing peaked in the late 1970s at approximately one million individuals—twice the employment of 1929” (Hess 9). If cars were non-existent thousands of Americans would be out of work. America’s landscape was also affected by the automobile. Large trucks were starting to be used in the '60s for mass transit of goods. Highways and interstates were being paved to allow large numbers of truck and car drivers to arrive at their destinations faster. The Interstate Highway System was formed. Without the automobile, these roads and quick ways of transport would not even be around. The Cold War at the time was also a major factor in influencing President Eisenhower to endorse this system. He wanted a faster and more efficient way to travel by car. Highways were his solution, and they helped in the mass transit of troops quickly around the country. Overpasses are 16 feet high because that was the size needed at the time to allow military vehicles to pass through. However, this major societal change was due largely in part because of the automobile. Another societal change due to the automobile in this time period was the creation of drive-in movies. People would meet at the nearest movie location, park their cars in front of the huge screen, and watch the movie in comfort. Drive-in theatres became a major hot spot for teenagers, who would take their dates to the movies. Families could pack into the car with their snacks, and watch movies late into the night. While being interviewed about societal changes brought on by cars in his generation, Anonymous 2 said, “Drive-through theatres were one of the greatest places to be on a Friday night. They use to put little sound boxes on each car so that everyone could hear the movie. What better form of entertainment could there be for teenagers with newly acquired licenses? These theatres just added to the fun of owning your own car” (Anonymous interview 2). Even entertainment was brought to a new level with the help of the automobile. Currently, cars still dominate when it comes to the most popular form of transportation. They have become essential to the functioning of people in everyday life. The average family has at least one car and spends more on transportation than on food (Young 232). The automobile sector accounts for 10% of the employment in the U.S. (Politics and Society 1). Especially today, with rising gas prices, people are finding it more economically beneficial to take public transportation instead of using their own personal automobiles. Everyone would rather travel in the comfort of their own vehicle, but sometimes the costs of doing this are too great for the people that are struggling financially. Many people have to commute long distances to their job every morning, but they don’t have enough money to pay for the gas. While being interviewed about what future cars will be like, Anonymous 3 said, “I don’t know, but I hope that someone will invent a car that runs on water, because then we wouldn’t have to pay so much for gas” (Anonymous Interview 3). Gas prices are a major issue in America today, and without the automobile, there would be no problem. With modern advances such as digital television and the internet, people are finding that they do not even need to leave their homes for entertainment. What’s the point of going to Blockbuster if movies are available for rent On Demand on your own home television? This takes away the necessity of the automobile going to the rental store. Some people are even able to do all of their shopping, banking, and working all on their home computers, which eliminates the automobile from day-to-day usage. As society becomes more technologically advanced, people are finding more reasons to stay at home, instead of going out whenever they have errands or want to do something fun. In a recent interview, a person said, “I don’t know if I can live in a world with no cars" (Anonymous). However, automobiles are still widely used by most people and will continue to be used as long as people have a need for transportation. Today’s engineers seem to focus more on the safety aspect of the car instead of it’s features. As cars become more advanced, the means by which humans are kept protected must advance as well. For example, laws were passed that forbid people from not wearing a seat belt. “Safety belts saved more than 12,000 American lives in 2001. Yet, during that same year, nearly two-thirds (60 percent) of passenger vehicle occupants killed in traffic crashes were unrestrained” (The Facts to Buckle up America 1). Also, new inventions such as the airbag and in-car sensors protect not only the passengers but whatever or whoever may be near the car on the outside. These inventions all came about because they are demanded by our current car-buying market. As the world becomes a more populated place, parents want safe vehicles to transport their children in. Automobile manufacturers began to realize that if they wanted to sell their cars, they would have to find new innovative ways of protecting passengers from the dangers of the road. They are coming up with new safety features in order to stay ahead of the industry. New types of vehicles aside from the typical sedan or coupe are becoming more popular in today’s market. In the ’90s, the SUV, or Sport Utility Vehicle, became and remains to be popular. SUVs allow for more people and belongings to be driven in the same vehicle comfortably. Large families buy large vans and SUVs because of the extra room that is provided for children and belongings. As convenient as they are, do not be fooled into thinking that there are no negatives. Larger vehicles typically burn more gas because of their size. Therefore, it cost’s more money to fill up an SUV than it does a regular car. The extra burning of gasoline is dangerous to our environment. However, most types of cars harm the environment. People are starting to realize that Global Warming is a real issue that needs to be dealt with. Pollution is causing this and it can permanently damage the face of the Earth. Pollution is a major environmental problem caused mostly by automobiles. The burning of fuels creates toxic emissions. Many Americans do not experience the horrible results of pollution that other poorer countries face in urban environments. Congress passed laws that minimized the standard for automobile pollution. There are laws preventing unnecessary pollution in the U.S., but other countries do not have these laws. That is why many major U.S. companies build their factories in other countries where they don’t have to worry about spending money on environmentally safe equipment. “Studies made in Jaipur, India, indicate that there is a high rate of occurrence of respiratory, digestive, ocular and skin problems amongst the traffic policemen and a significant number of them become victims of lung disorders in the very first few months of their posting to a traffic department” (Sinha 1). This is because day after day they are exposed to the toxic emissions from cars in urban areas. Today, many new types of eco-friendly vehicles are being invented to slow the process of global warming. These cars are able to run on something other than gasoline. Examples of new types of cars are electric, fuel cell, solar-powered, hybrids, and ethanol. There has even been talk of a car that runs on water. Hybrids are currently becoming more popular. More and more people are buying hybrids because they want to save money on gasoline. Hybrids save fuel by using both gasoline and electricity to run the car. People have realized that using alternative fuels will help to conserve our world’s natural resources and also limit the bad effects on the environment. This could help prevent the current problems regarding global warming and all of the bad effects that come with it. With rising gas prices, even people that don’t care so much about the environment are starting to switch their cars in order to save money. Think of how much money would be saved if people did not have to fill their cars up with gas every week. Automobiles are a symbol of personal growth and development. When a young person reaches the age of sixteen in the U.S., they will most likely obtain a license, which will enable them to drive a car. Teens look forward to receiving a license because it is an opportunity for more freedom. They can now go places and not have to worry about catching a ride with somebody. But, having a license also comes with responsibilities such as driving safely and following the rules of the road. Many people are killed every year because of teenage drunk drivers that aren’t responsible enough to have their licenses. Now, the government is putting more restrictions and limitations on the laws regarding driving and licenses. Last year, for example, the driving time requirements in IL for obtaining a license changed from 25 hours of behind-the-wheel practice to 50 hours. These steps are being taken in order to ensure that teens are better drivers, and make better choices when it comes to getting behind the wheel. Owning an automobile and getting a license has now become a rite of passage for teenagers. Automobiles have even helped spark societal traditions. The automobile has affected this country more than any other invention of its time. It must adapt to whatever is going on in the world at the time and keep up with future innovations. With the coming of each new year, cars are becoming quicker, more luxurious, and more environmentally safe. It is predicted that there will be a billion cars on the road by 2025 (Kruger 252). The invention of the automobile opened up doors to new inventions. It allowed people to worry less about making it to dinner on time, and worry more about the actual dinner. People can travel faster in automobiles and feel more comfortable at the same time. Automobiles were and continue to be the main source of transportation not only for Americans but for everyone on earth. They will continue to influence every part of our economy. Without automobiles, life as we know it would not be the same, and the changes that they have brought to the earth can be seen in every aspect of society. Works Cited
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional. |
What was one effect of the popularity of the automobile on the u.s. economy? (5 points)
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