General Motors Company (GM), Wal-Mart Stores, Inc. (WMT): Eight Big Outliers That Should Revert to the Mean

5. Auto sales per household.

Source: Census Bureau, Federal Reserve.

Auto sales are back to pre-recession levels last seen in 2007. But there are several million more households today than there were in 2007. Adjust for that, and auto sales are still good amount below historic norms.

There are two conflicting forces affecting sales here. One, Americans are driving less. That lowers demand to replace cars. But, two, the average age of cars on the road is now near a record of 11.4 years. Those clunkers will need to be replaced. Auto sales should continue to rise, which is good news for Ford and General Motors Company (NYSE:GM).

6. State and local government spending contribution to GDP growth.

Source: Bureau of Economic Analysis.

Cutbacks from state and local governments have been one of the most overlooked causes of our slow recovery. State and local spending — which includes teachers, firemen, police, etc. — has historically added more than three-tenths of a point to annual GDP growth. Over the past four years, it’s subtracted about the same amount as austerity set in. But things should start to stabilize soon as tax revenue increases.

7. Gold prices adjusted for inflation.

Source: Federal Reserve.

Gold has maintained its value for centuries. It returns approximately nothing, after inflation. But that’s all it does. That’s all it should do. So when the price of gold rises well above its historic real (inflation-adjusted) price, you should expect a correction. We’ve already had one — gold is down about 30% since late 2011 — but you can make a strong case that there’s more decline to come. My colleague Alex Dumortier has been making this case for years.

8. Google searches for the word “unemployment.”

Source: Google.

This will eventually fall to normal levels. Seriously. Things will get better.

The article 8 Big Outliers That Should Revert to the Mean originally appeared on Fool.com and is written by Morgan Housel.

Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors and owns shares of Ford.

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