Story has been updated with early morning prices for Ford and GM shares.
DETROIT (TheStreet) -- Not surprisingly, record stock market performance is being matched by continued strength in the U.S. auto markets, with expected August automotive spending of $39 billion, the second highest monthly total in history.
However, the auto market, like other economic sectors, shows occasional signs of frothiness and easy credit, fueling concerns about a potential fallback.
Read More: Delta Is Right on the Ex-Im Bank -- Too Bad the Tea Party Is its Biggest Ally
Car sales for August are expected to be flat compared with the same month a year earlier, partially because August will have 27 sales days this year, compared with 28 sales days in 2013.
Nevertheless, consumer spending on new vehicles in August is expected "to approach $39 billion, the highest level on record for the month of August and second-highest month ever behind July 2005 ($39.7 billion)," said J.D. Power analyst John Humphrey in a prepared statement.
Read More: 5 Most Beloved U.S. Airlines of All Time
"The record consumer spending is fueled by both high sales volumes and high transaction prices," Humphrey said.
Auto sales numbers are among the best economic indicators because they track a major consumer purchase, are reported quickly after the month ends and are almost never revised. Car sales for August are scheduled to be reported on Sept. 3.
Ford (F) shares year to date are running ahead of the S&P 500, while shares in GM (GM) , hobbled by an ignition switch scandal that led to 27 million recalls this year, have slid.
Shortly after the opening bell on Wednesday, Ford shares traded down 7.5 cents to $17.29, while GM shares traded down 29 cents to $34.42. Year-to-date, Ford shares are up 12%, the S&P 500 is up 8% and GM shares are down 16%.
The pace of auto sales, tracked as the seasonally adjusted annualized sales rate, ihas been gaining ground this year. "We expect August U.S. light vehicle SAAR to track at roughly 16.6 million, representing a solid 5% improvement from 15.9 million in August of 2013, and a 1% increase from last month's 16.4 million," wrote J.P. Morgan auto analyst Ryan Brinkman in a recent report. TrueCar also forecasts an August SAAR of 16.6.
JD Power affiliate LMC Automotive projects 2014 sales of 16.3 million units, up 5% from 2013.
"As a very robust summer selling season winds down, optimism continues in the auto industry for the remainder of 2014, with expectations of economic growth beginning to catch up to the growth in autos," said LMC analyst Jeff Schuster in a prepared statement.
Auto sales have climbed steadily since they hit a 27-year low of 10.2 million in 2009. Sales reached 15.6 million in 2013. Sales of 16.5 million would equal the 2006 level.
Potential problems in the auto market, and perhaps in the economy, are easy credit and other signs of frothiness.
Read More: Ford, GM Say Auto Sales Are Not Overheated - So Don't Panic
In mid-August, during a conference call with Detroit reporters, John Mendel, executive vice president of sales for American Honda (HMC) , warned against excessive subprime financing.
"It's a very, very short-term tactic, especially in the subprime area, because you not only are pulling sales forward, you're probably pulling people out of used cars into a new car that maybe they can't afford," Mendel said, according to Automotive News.
Mendel said Honda remains focused on retail sales, even if that means suffering a loss of overall U.S. market share as competitors ratchet up fleet deliveries in an improving economy, Automotive News reported. "Our strategy is working," he said. "We're doing what we need to do." Through July, Honda's U.S. sales were down 1% in an overall market that had gained 5%.
Various experts, including TheStreet's Doug Kass, have concluded that the auto market is becoming overheated, although automakers and some analysts dispute the contention.
"Growing evidence suggests that the automobile industry is about to pause/peak, just like the housing market did 12 to 18 months ago," Kass wrote in a July column. "The potential for climbing delinquencies on auto paper will likely result in banks beginning to withdraw somewhat from the previously aggressive lending policies that have fueled auto industry demand over the past five years," Kass said.
Edmunds.com said recently that only about 23% of car buyers purchased with cash or outside financing this year, as opposed to dealer financing and leasing. The rate could be the lowest level ever -- down from about 35% just five years ago, Edmunds said.
As for total August light vehicle sales, TrueCar forecasts 1.5 million, about the same as August 2013.
"Despite one fewer selling day, sales are tracking to match last year's epic August," said John Krafcik, president of TrueCar, in a prepared statement. "While we continue to keep close tabs on inventories and incentives, we remain upbeat about auto industry sales, segment mix and profitability."
TrueCar expects sales declines of 1% at GM, 3.4% at Ford and 5% at Toyota (TM) . However, it projects a gain of 15.4% at Chrysler. Cars.com projects declines of 1% at GM, 2.2% at Ford and 6% at Toyota, with a 16% gain at Chrysler. After adjusting for selling days, J.P. Morgan's Brinkman said he expects GM and Ford to both report sales gains around 5%.