Full Chrysler Recovery A Few Years Out, Chief Economist Says

By: Tony Tagliavia Email
By: Tony Tagliavia Email

Gas prices should stay put in the mid-$2 range over the next year, according to DaimlerChrysler Chief Economist Van Jolissaint.

It's good news for the Chrysler Group and its thousands of Michigan workers.

Seventy-five percent of the vehicles it sells are trucks.

The steady gas prices could stabilize sales as consumers slowly move back to SUVs and light trucks, a segment some avoided last year.

"In 2006, people had the bejesus scared out of them by gas prices," Jolissaint said.

The chief economist, testifying on the day Chrysler rolled out a new buyout plan for workers, says his employer has at least some reason to be hopeful.

Americans are willing to buy new cars right now, he says, but things like credit card debt and bigger mortgages could sap consumers ability to do that. Other factors could hurt the big three.

"The price of steel is way up," he said.

The Michigan Senate Commerce and Tourism Committee hosted Jolissaint. Economists from General Motors and Ford testified two weeks ago.

It's an effort to figure out "how we can keep (the industry) thriving in the state of Michigan," said Sen. Jason Allen (R-Traverse City), the committee chairman.

Like his colleagues at GM and Ford, Jolissaint says health care costs hurt, as does currency manipulation by the Japanese government.

So what does the automotive industry economist say about Michigan's economy in general?

"Times are not good for the state and they're not likely to get a lot better in the near future," Jolissaint said.

Eventually, the state could climb out of it by diversifying the economy. Stabilization of the Big Three would also help. That's something he says could happen this year.

"We think the job losses will likely come to an end," Jolissaint said, as the automakers come closer to producing the number of cars they can actually sell -- without huge discounts.


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