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executives are right when they say consumer spending has slowed because consumers have lost faith in policy makers, but you wouldn't know it from a new forecast of surprisingly strong September U.S. auto sales.

New-vehicle retail sales for September continue to improve, with the selling rate expected to be much stronger than in August, according to the report by

J.D. Power


The firm said September new-vehicle retail sales are projected to come in at 842,000 units, marking a seasonally adjusted annualized rate of 10.3 million units, the first time since April that the retail SAAR has been above 10 million.

"Coming off a solid Labor Day sale, retail sales exhibited unexpected strength in the second week of September, as the recovering inventory levels have helped to bring buyers back into the market," said J.D. Power analyst Jeff Schuster, in a prepared statement.

Power analysts did add a note of caution. Schuster noted that "Incentive levels remain flat compared with August and the economy remains a concern, so the sales pace in the second half of the month is expected to give back some of the gains," while analyst John Humphrey added that "the uncertain global environment, specifically the debt troubles in Europe, continue to be the major source of downside risk in the U.S. economy and automotive markets."

Still, overall indicators in the auto sector were positive on Thursday.

J.D. Power said the total light vehicle SAAR for September, which includes fleet sales, is projected to be 12.9 million. Given the September strength, the firm maintained its forecast for light-vehicle sales in 2011 at 12.6 million, up 9% from the preceding year. That is slightly below the total projected by


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J.D. Power said the Detroit Three, including


have increased production by 16% year-to-date, while Japanese manufacturers have lost 8% as a result of parts shortages.

An additional positive for GM on Thursday came when Moody's said it is reviewing the company's credit for a possible upgrade. The central issue in the review will be GM's ability to sustain its improved performance over the longer run, Moody's said.

As an indicator, retail auto sales "are considered the most accurate measurement of true underlying consumer demand for new vehicles," J.D. Power said. Because vehicles tend to be the second most costly consumer purchase after homes, retail auto sales are considered to be an important indicator of consumer sentiment.

However, shipments by FDX and


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are also considered an important indicator because the two overnight package companies carry large chunks of the world's GDP. In fact, UPS maintains that, at any moment, 2% of world GDP and 6% of domestic GDP are being transported within its system.

FedEx said Thursday morning that it was slightly decreasing its full-year estimates, by about 10 cents a share, after global air cargo shipments declined unexpectedly during the summer. Much of the slowdown is in electronics products from China. In late morning trading, FedEx shares were down $5.96 at $66.54.

CEO Fred Smith said consumer sentiment has declined due to a loss of faith in policymakers. "We expect sluggish economic growth will continue," Smith said, but FedEx does not see a recession. "There hasn't been a collapse in demand," he said. "(But) the consumer just doesn't have an appetite for considerably more purchases."

One other positive sign is airline bookings. "We feel surprisingly good,"

US Airways


President Scott Kirby said Wednesday, during an investor conference.

"Advanced bookings are ahead in every month as far out as I looked (and)close-in business demand is strong," Kirby said. Several other carriers have recently been reporting similar outlooks.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here:

Ted Reed

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