Much talk about the Fiscal Cliff in the news now that the election is completed. Will the PIP have a 2013 Sales Increase as people look for additional tax break if the Bush Tax Cuts expire in January?
I realize people are irrational, but spending $30k on a new car just so you can get a 2,500 credit? Really?
Are you unaware of any other benefits of the Prius PHV? Or was your observation about if that was the deciding factor for folks to buy a PHV?
Government spending contributes to or is someone's paycheck. Unemployed people don't buy expensive cars. I'm sure those with large amounts of property damage don't have "Buy a hybrid or EV" on the top of their list of things to do. Large companies may continue to pay people who aren't working for some short period of time or relocate them to another facility but I'll bet in the hardest hit communities there are people now with no home, no job & no car. Some of my coworkers still don't have electricity. Children have not returned to school. Insurance payments aren't known for their promptness. Ask the Katrina victims how long it claims settlement took. As the sales territory increases so will the number of PiPs sold. However, I don't expect 2013 to be a good year for the auto industry.
Fiscal cliff is advertising gimmick of media and political lobbyists. It has little effect and most of it good. $100B in spending cuts, $50B in military spending, $50B everything else. $100B in tax increases. This from a $1.5T budget. US economy would not notice a thing. We could put all the cuts to the $1T a year in military spending and/or cut ag subsidies $22B, eliminate Bush's "No child" and Obama's "Race" worthless "education" programs, $10B. What will effect hybrid sales in the East is the effect of Sandy and the gas lines.
The latter, I don't undertand how the supposed fiscal cliff will make a difference in 2012 vs. 2013. The reason these cars were selling poorly was because the price was high and the economy is low, not because people were paying too little in taxes and now, to prevent their taxes from going up, they'll suddenly decide to buy this car.
If you didn't have 2500 in tax liability before, either you are a shrewd investor or are not the market for this car. In either case I don't think this will change. There may be quite a few people looking to replace cars after Sandy and with the $4000 Toyota rebate the PiP may look good.
Most economists believe if the fiscal cliff is not averted and instead left to play out, we are very likely to see a drop in gross domestic product (GDP) sufficient to cause a recession in 2013. Generally, recessions mean lower car sales. Recessions also, usually, mean lower gas prices which is also bad news for the sale of hybrids, plug-ins, and EVs. This is not the environment where people would spend more money as the additional tax credits/rebates would not make up the difference.
"Most economists" don't and for good reason. In a $1.5T budget and a $15T economy, the $100B decline in gov't spending and $100B increase in taxes is of such small magnitude (6% of budget and 0.6% of economy) and will have like wise small effect. That 50% of the spending cuts are in the military which is a 100% non-productive drag on the economy actually makes 50% of the spending cut a net plus for the economy. One could argue the same on the other cuts if they are concentrated in unproductive programs like ag subsidies and destructive programs like "No Child Left Behind" and "Race to the Top", $32B in pure waste.
ProximalSuns, you are simply wrong. Please list your sources if you are going to make this assertion which is against most economic thought. This is basic economics and is supported by economists on both the political right an left. Here is a good summary from UCSD Economist Jim Hamilton, who discusses: a recent assessment by Bank of America Merrill Lynch estimates the tax increases in 2012 could come to $470 B and spending cuts another $250 B, for a combined fiscal shock of $720 B, or 4.6% of GDP...a fiscal contraction of this size in an economy as weak as the United States would likely be enough to send the country back into a recession: Econbrowser: Going over the fiscal cliff Also, the non-partisan Congressional Budget Office (CBO) believes this will lead to a recession both in terms of significantly worse GDP and unemployment: CBO | An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022 Here are just a couple links on typical economists who believe this will lead to recession discussing the topic: Paul Krugman, Nobel Laureate Economist: Paul Krugman On Fiscal Cliff: Republicans 'Holding America Hostage' David Wessel - Pulitzer Prize winning - Economics Editor of the WSJ: Greg Mankiw's Blog: The Fiscal Cliff: A Primer
The only way I know to get out of a recession is to spend your way out. This works as long as the money is spent in the country and taxes are raised later to retire the debt. Historically, people had to be in a specific place to do or make things. Now they can be anywhere. Are US based corporations firing Americans to save on taxes? No, they are doing so because that same job (not talking quality) can be done anywhere. Generally all you need is a computer, electricity & a connection to the Internet. A Business Analyst in India is paid US$3000-$10500. That's $1.56-$5.47/hour. As long as it takes less than 7 people to get the same amount of work done the company is ahead of the game. (Genpact Salaries | Glassdoor) In the US we don't retire debt. We borrow when times are bad. We borrow when times are good. This works as long as there is a source of funds available to buy the debt. We'll have a problem when the new money dries up & the old money wants out. Social Security is the largest holder of Federal debt. What happens when that debt needs to be cashed in to pay benefits? Are US Savings Bond sales covering redemptions? The Reagan debt is coming due & we're cashing out. It seems the choices are a smaller longer, probably permanent contraction now because spending & taxes have to be brought in line, or more of the same & wait for the balloon to pop like in Greece & Italy & Spain, or use our military might as military might has been used historically to take resources & wealth from somewhere else, or repudiate the debt & defend against those who will come to take payment in kind. It took an awful long time to get into this mess. It will take an awful long time to get out. We're not on a fiscal cliff. We are Wiley E. Coyote and the ledge beneath our feet just crumbled. You know when we hit the canyon floor the anvil is going to drop on our head.
