Business briefing
Subprime car buyers drop out of market
The American consumers who were stretching themselves to buy or lease a new car are starting to go missing from showrooms.
Rising interest rates and new-vehicle prices are squeezing shoppers with shaky credit and tight budgets out of the market. In the first two months of this year, sales were flat among the highest-rated borrowers, while deliveries to those with subprime scores slumped 9 percent, according to J.D. Power.
The researcher’s data highlights what’s happening beneath the surface of a U.S. auto market in its second year of decline after a historic run of gains. Automakers probably will report sales in March slowed to the most sluggish pace since Hurricane Harvey ravaged dealerships across the Texas Gulf Coast in August, according to Bloomberg’s survey of analyst estimates.
“There’s not a bubble of subprime. But as interest rates rise, it’s going to affect” those customers first, said Dan Mohnke, senior vice president of U.S. sales for Nissan.
The silver lining for those who now find new models too expensive is that millions of lightly used cars and SUVs are now coming off lease, providing a good supply of better-equipped, nearly new models at falling prices.
Construction spending edges up
Spending on U.S. construction projects ticked up a mere 0.1 percent in February from the prior month, a sign the economy is doing little to spur a more rapid pace for building.
The Commerce Department said Monday that construction spending came in at a seasonally adjusted annual rate of $1.27 trillion. The lower unemployment rate and solid business and consumer confidence has supported an increase in hotel and office construction, but spending on roads fell.
Construction spending over the past 12 months is up just 3 percent before adjusting for inflation. Some of the sluggishness in February was due to a 2.1 percent drop in government-funded construction.
Facebook CEO defends ad model
The CEO of Facebook is defending its advertising-supported business model.
Mark Zuckerberg’s defense comes after Apple CEO Tim Cook said his company wouldn’t be in Facebook’s situation because Apple doesn’t sell ads based on customer data the way Facebook does. Zuckerberg responded Monday that an advertising-supported business model is the only way that the service can survive because not everyone would be able to pay for Facebook if it charged a fee.
He says the idea that Facebook doesn’t care about its customers is “extremely glib.”
Zuckerberg spoke with Vox, while Cook talked with Recode last week.