General Motors (GM) Indicator

Filed Under »
Dictionary Says

Definition of 'General Motors (GM) Indicator'

An indicator based on the theory that the performance of U.S. automaker General Motors (GM) is a pre-cursor to the performance of the U.S. economy and stock market. The GM Indicator relies on the assumption that when people are confident and making money one of the first things they would do is buy a new car.
Investopedia Says

Investopedia explains 'General Motors (GM) Indicator'

There is still some talk behind this strategy as there is a correlation between auto sales and the overall economic standing of individuals. But this theory had more weight in the 1970s-80s when GM was by far the largest carmaker in North America. Since then GM's importance to the U.S. economy has declined due to greater competition.

During the financial crisis of 2007/2008, GM saw sales decline due to a decrease in demand for their "less" fuel efficient vehicles, and a decrease in available funds for financing due to credit restrictions. Their stock price dropped over 70% compared with a general market decline of around 30%. Although a correlation exists, the overall market and economy relies less on the performance of one automaker than it did in the 1970s.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Bellwether

    An event or ...
  2. Indicator

    Statistics used ...
  3. Leading Lipstick Indicator

    An indicator ...
  4. Aspirin Count Theory

    A market theory ...
  5. Skirt Length Theory

    The idea that ...
  6. Consumption Function

    The consumption ...
  7. Herbert Demel

    A CEO who has ...
  8. Stock Keeping Unit - SKU

    A store's or ...
  9. Corporate Cannibalism

    An act of ...
  10. Cash For Clunkers

    A program that ...

Articles Of Interest

  1. Economic Indicators To Know

    The economy has a large impact on the market. Learn how to interpret the most important reports.
  2. Consumer Confidence: A Killer Statistic

    It's the key to any market economy, so investors need to learn the measures and how to analyze them.
  3. Recession: What Does It Mean To Investors?

    Understanding the business cycle and your own investment style can help you cope with an economic decline.
  4. Consumer Spending As A Market Indicator

    What people buy and where they shop can provide valuable information about the economy.
  5. Getting A Grip On The Cost Of Gas

    Feeling overwhelmed by rising oil prices? We offer some tips that will save you money.
  6. Strategies To Reduce Pain At The Pump

    Here's a look at why gas prices are so high and how that can be changed in the U.S.
  7. 5 Ways To Fund A College Education

    You can go to college without going broke, but it may take an unconventional approach.
  8. Top 10 Ways To Get Top Dollar For Your Car

    Find out what steps you can take to reduce the depreciation of your vehicle.
  9. Save On Planes, Trains And Automobiles

    Getting to, and around, your travel destination doesn't need to break the bank.
  10. 6 Months To A Better Budget

    Can you have perfect abs in just six minutes a day? Maybe not, but you can have a rock-solid budget in six months.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center