SANTA BARBARA, Calif. -

When revealing its Industry Report this month, ALG explained in its Market Outlook that increased sales will likely be impacting supply returning to the used-vehicle market in three to four years.

On top of updating its used market supply forecast, the company lowered residual residual values across all segments at a rate amounting to 0.3 percent on average.

As for the overall impact for its September/October edition, ALG predicted, “Total change (including expected declines and economic out¬look) for the edition, on average, had an impact of -0.7 percent in the 36-month term with some variation among segments.”

Delving further into the U.S. economy as a whole, ALG reported as the 2012 presidential election draws near, economic conditions in the United States have “deteriorated slightly in recent months.”

In fact,  second-quarter real gross domestic product (GDP) came in at an annual growth rate of just 1.5 percent.

“Nevertheless, the economy continues to slowly expand, with the second quar¬ter now marking three straight years of GDP growth,” the company reported.

And though the economy remains stagnant, U.S. consumers are staying "relatively optimistic," with confidence increasing in July to 65.9 from 62.7 in June, the company noted.

This could bode well for dealers as the average age of vehicle on the roads rises above 11 years, and many consumers are in the market for a new ride.

That said, ALG officials noted, “This (consumer confidence) is still low by historical standards, but one of the highest values observed during the past four years.”

And the company also noted it has updated its economic outlook for the September/October 2012 edition relative to the July/August 2012 edition of its Market Outlook.

First up, ALG commented on the rising gas price trend that dealers and others in the industry have been keeping an eye on.

“West Texas Intermediate oil prices declined significantly in June, reaching $82 per barrel after sitting above $100 per barrel during the first four months of the year. Prices rebounded in July to $88 per barrel, however gasoline prices continued to decline through July, reaching $3.44 per gallon,” officials noted.

“In light of recent market conditions, ALG’s expectations for gas prices have been lowered over the longer term, though prices are still expected to slowly rise. Gas prices could fluctuate in the short term due to latest hurricane activity,” they continued.

Also, the company noted that the housing and labor markets have been looking down lately.

In fact, ALG noted that “housing has been one of the most challenging aspects of the recovery to date.”

And the company explained “improvements in the labor market have slowed in recent months.”

“Following a sharp drop in the unemployment rate between August 2011 and January 2012 further progress has been elusive. After rising to 8.3 percent in July, the unemployment rate is now at the highest level since February,” officials further explained.

“Though the recovery has been disappointing so far, there have nevertheless been 22 consecutive months of employment growth. ALG is now projecting slightly higher wage growth for the September/October edition. Wages will grow by an average of 2.6 percent per year through 2017, with the greatest growth occurring between 2014 and 2016 when the economic expansion finally accelerate,” they concluded.