AutoNation Inc. Chief Executive Mike Jackson isn’t about to fight the Federal Reserve, saying Monday that he agreed with the central bank’s view that inflation is transitory.
“So I agree with the Federal Reserve, I think inflation is in principle, we have a transitory situation here and things will look different by the end of the year.”
— AutoNation CEO Mike Jackson
Jackson said there were “two big factors” that fueled the recent jump in inflation, both of which should be “resolved” by the end of the year.
The first factor is the “exceptional” unemployment benefits that were paid out during the COVID-19 pandemic, which Jackson stressed were “appropriate” considering the circumstances. The second is prices for preowned vehicles were rising off depressed levels a year ago, as the pandemic forced some companies to liquidate their preowned fleets.
He expected both factors to fade by the end of the year.
Jackson made his comments in a conference call with analysts following the auto dealership company’s second-quarter results.
Earlier Monday, AutoNation reported second-quarter profit and revenue that rose well above expectations, with new vehicles sales surging more than 50% and used vehicles soaring nearly 70%.
rose 3.7% to close at $106.34 on Monday, to buck the sharp selloff in the broader stock market, as the S&P 500 index
tumbled 1.6%. The stock closed just shy of the May 6 record of $106.89.
Last week, Fed Chairman Jerome Powell said, that while inflation has increased more than he was hoping to see, he still believed it was transitory and would fade away this year.
There is a growing concern that recent rampant inflation may end up lasting longer than expected, especially given the Fed’s reluctance to pull back on its accommodative stance.
And back in May, Energizer Holdings Inc.
CEO Mark LaVigne also disagreed with the Fed, saying he believed that rising materials costs would likely last into next year, and had already started betting on that view: “As we look to the future, we do not believe that these, costs are transitory and have initiated productivity and revenue management efforts to offset them.”