Hitting the limits of demand

The stone has been squeezed dry:

Red hot auto sales under the U.S. government’s “cash for clunkers” incentive began to cool as dealer inventories tightened and showroom traffic showed signs of leveling off from its frantic pace of a week ago.

The funny thing about this reporting is that this supposedly “red hot” and “frantic” activity only drove the “best annualized rate” of car sales to a little more than half the 2002 rate. Those of you who recall what happens after the demand curve snaps back should have a pretty good idea of what is in store for auto sales this fall.