From SEMA Market Research
Even with the conflict in the Gulf and Strait of Hormuz not entirely settled, the markets positively reacted to the reopening of shipping routes. Crude oil prices dropped to roughly $70 per barrel after hitting a peak of more than $100 in April and May. The $70 price point nearly brings the cost of crude down to the pre-conflict $65 range. Hundreds of ships have passed through the Strait since the cease-fire agreement: While it will take time to get supply chains stocked, the resumption of the supply of oil and other goods should ease price and supply pressure.
In May, the Consumer Price Index rose to 4.2%, largely driven by a 23.5% increase in energy costs, most notably a 40.5% surge in gas prices, while other categories remained constant. With crude oil dropping, gas prices are following suit, with the national average for regular gasoline down nearly $.60 per gallon from a month ago. Gas prices are one of the most visible signs of inflation, so falling prices ease the minds of consumers.
With inflation somewhat elevated, the Fed kept the federal funds rate unchanged at 3.50%-3.75% in June 2026, as expected. The current rate is significantly lower than it was in 2025, which may enable consumers to refinance auto loans at lower rates. Fed governors seem to be split on whether there should be additional cuts or possible rate hikes later in the year. So far, these interest rates have not shown a negative impact on employment.
The unemployment rate held steady in May at 4.3%, while the economy gained 172,000 jobs. The employment market has stayed very stable with an unemployment rate between 4.3%-4.5% over the last year. The Federal Reserve Bank of Philadelphia Survey of Professional Forecasters predicts the unemployment rate to remain steady with an average between 4.4%-4.5% over the next few quarters. The stable job market should keep consumers confident in their ability to spend through the remainder of the year.
The economy continues to grow, and the U.S. Bureau of Economic Analysis reported that real GDP increased at an annual rate of 2.1% in Q1 2026. This growth is significantly higher than the 0.5% rate reported in Q4 2025. Consumers are better off, with personal income increasing $181.6 billion (0.7% at a monthly rate) in May. Spending was up by 0.7% with an added $156.1 billion pumped into the economy. Motor vehicle and parts spending was up by $5.4 billion in May. Total consumer spending reached $22 trillion in May and has shown no signs of slowing down. The Federal Reserve Bank of Philadelphia Survey of Professional Forecasters predicts real GDP to expand 2.2% in 2026.
While there continues to be uncertainty globally, key indicators of the U.S. economy such as employment, income and spending remain strong. As shipping returns to normal and supply chains catch up, the expectation is that it will relieve some pricing pressures across the market. As gas prices decline and job security remains strong, consumers are likely to stay confident in their spending, continuing to support GDP growth and activity in our market.
The new "2026 SEMA Market Report" was just released and shows that the U.S. specialty-equipment industry remained strong through 2025. The overall accessory and performance parts market grew about 1% to a new high of $52.92 billion in retail sales. While passenger cars continue to be solid targets for accessorizing, light trucks have become the major sector within automotive and the aftermarket. Pickup modifications account for 30% of the market, as they are such a great platform for off-road, utility and performance upgrades.
For the latest on the size and scope of the specialty-equipment market, download the just released "2026 SEMA Market Report." SEMA members can download the report for free at www.sema.org/research
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