ATLANTA -

With the deadline to file personal federal income tax forms having passed more than a week ago, Manheim economist Tom Webb answered dealer questions about activity connected to refunds.

In his April Auto Industry Brief, Webb first shared the dealer inquiry he received.

“My used-vehicle operation had a better-than-more normal tax refund season,” the dealer began. “Fellow dealers tell me they had the same experience, but I read that actual tax refunds were down this year. Is that true?”

Webb started his response saying that what the dealer discovered was true.

“The latest statistics from the IRS are for the period ending in the first week of April,” Webb continued. “The number of refunds year-to-date was down 0.6 percent and the dollar amount of refunds was off by 4 percent from a year ago.

“This is the first time that the level of refunds has fallen from its year ago level in decades. But, like you, I have heard it was a better-than-normal tax refunds season for dealers,” he added.

Webb thinks there are two possible explanations for why dealers turned more vehicles or kept the service drive steady thanks to refunds. And he contends both factors are likely true.

“First, a greater share of refunds might have gone to low- and middle-income households that are more likely to use it on a used-car purchase,” Webb surmised.

“And, second, households might have been more likely than in the past to use their tax refund to help buy a used vehicle,” he went on to say.

Broad Economic Analysis

Webb also used the April brief to share his thoughts on where the U.S. economy might be heading.

“With the economy appearing to enter another summer slowdown (just as it did in 2010 and 2011) some fear it might be, as Yogi Berra would say, ‘déjà vu all over again,’” Webb began.

“After all,” he continued, “the symptoms and causes today are not that dissimilar from prior years: higher gas prices, slower job growth, no bounce in housing, low consumer confidence, omnipresent European debt issues and even the potential for another disruption in the automotive supply channel.

“In reality, however, the short-term fundamentals of the economy are much better today than they were last year — and certainly better than two years ago,” Webb emphasized. “The financial system is stronger, the economy has benefitted from another year of growth (albeit slow) and some of today’s problems will likely prove more fleeting than in years past.”

So what could derail the nation’s financial outlook and in turn slow dealer sales?

“The serious long-term threat to the U.S. economy is not those mentioned above, but rather our inability to address structural deficits of more than a trillion dollars a year and the uncertainty created by sporadic, and unpredictable, stopgap measures enacted with little, or no, lead time,” Webb concluded.