Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, February 13, 1994                   TAG: 9402110040
SECTION: BUSINESS                    PAGE: F-1   EDITION: METRO 
SOURCE: LON WAGNER STAFF WRITER
DATELINE:                                 LENGTH: Medium

CAR SALES, CONFIDENCE DRIVE ECONOMY

They started with the big stuff, specifically cars.

Roanoke-area car sales in October, November and December of 1993 jumped almost 60 percent - to 2,149 - from the fourth quarter of 1992.

Significantly, Rick Johnson, sales manager of Magic City Motor Corp., said the increased car sales on his lot were by individuals, not attributable to fleet sales.

Johnson said sales improved monthly in 1993, and manufacturers are advertising as though sales will continue to improve this year.

"That's certainly the way we're stocking them," Johnson said. "We're ordering cars like they're not going to make them anymore."

Improved cars sales, economists say, are attributable to numerous positive signs in the overall economy. In the fourth quarter, the real gross domestic product - the inflation-adjusted sum of the goods and services produced in the United States - grew at a 5.9 percent clip.

In addition, Richard Sorensen, dean of Virginia Tech's business college, points out that the stock market also is doing well, meaning people feel more wealthy; unemployment is down; and interest rates are low. Banks are charging about 6 percent for new car loans.

"The average age of cars is the highest it's been in 20 years," Sorensen said. "There's so many old clunkers out there, people have to replace them."

Crestar Bank economist Christine Chmura noted that other interest-rate sensitive sectors such as home and furniture sales are improving as well.

Compared to 1992, single-family housing starts in the fourth quarter in Virginia rose 26 percent, and by 18 percent in the Roanoke area, Chmura reports.

People who endured three years of recession followed by slow recovery are finally starting to feel good about the economy, she said.

Consumer confidence at the end of the year stood at 80 percent, and rose to 83 percent in January. Those numbers measure how people felt about the economy compared with how they felt in 1985.

"When people started to get confident that the recovery will continue," Chmura said, "they began purchasing some items they may have been delaying until they felt better."