With the heads of the Big 3 automakers and the United Auto Workers testifying before Congress right now about the urgency of a federal bailout, I had an interesting talk with UC San Diego economist James Hamilton.
Hamilton said the role of the auto industry shouldn't be overlooked when we try to dissect the economic meltdown.
He said the economy "was getting along for a couple of years" with a rotten housing market. But things didn't really start to go south until the auto industry began crumbling earlier this year. That helped bring the whole economy to a point that it was vulnerable to the crisis that engulfed the markets in mid-September. Obviously, the mortgage problems were the big catalyst, but the impact of the auto sector's woes were a major factor, too, he said.
More on this soon. We're working on a story on what the collapse in auto sales has meant to Sacramento; it'll appear in the paper in the coming days. Meanwhile, my colleague Mark Glover just reported that another car dealer in the region has folded. This is the eighth to go under this year.
Oh, and by the way - gas prices fell another 3 cents today in Sacramento, to a $2.21, according to AAA. So if you can't splurge on a new SUV or otherwise juice up the economy, at least go fill up the tank in your current car.