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growth, well below 1987’s total increase of 9.5 percent, to continue for the rest of the year.
August was the third straight month of decline in new car registrations, a trend which Mr. Pearson expects will continue this falL With registrations for the year to-date up only 1.5 percent from 1987, he predicts that rising interest rates and lack of spectacular sales incentives will mean lower total car sales this year than last.
Bank debits, which were down in July from the same period a year ago, bounced back in August, but “little significance can be attached to the swing,” according to Mr. Pearson. For the year to-date, bank debits were down 5.9 percent from the same period in 1987, “supporting other evidence of a shift to more conservative spending plans during 1988,” he said.
Building permits, down 8.5 percent statew ide in August after a 13.2 percent gain in July, must be interpreted cautiously, since it is one of the more volatile economic indicators, Mr. Pearson said. He pointed out that the negative swing did coincide with “the Federal Reserve System’s clear move to raise interest rates, demonstrating their commitment to restraining the nation’s real output growth to a sustainable pace.”
Given that circumstance, says Mr. Pearson, the drop in building permits may be “at least partly a reaction of Virginia builders to the prospect of higher interest rates and slower growth following the Fed’s action.”
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