(March 25, 2008) – I love the Manheim Index. Manheim runs used car auctions all over the place and collects the actual sales prices of 5 million used car transactions every year. (Way better than any government agency collects data.) They report the index about the 5th business day of every month. It is absolutely, hands down, the single best measure of household balance street pressure and liquidity I have ever seen.
As you can see in the chart on the left, above, when people get pinched for cash they harvest the assets in their driveway. And the chart on the right shows that, although prices have fallen every month since last September when the mortgage crunch hit, they have not fallen as much as they did in 2002-2003 when the employment numbers were falling.
The monthly data, above, show that prices are still falling. Used car prices have fallen by about 6% since their peak last September. When the Manheim Index turns the corner and starts to rise again, that will be the all clear whistle. Until then, people are still being squeezed.