In addition to housing, auto production has been a drag on the economy during the past few quarters. The auto industry has felt the effects of high oil prices and people's growing preferences for more fuel-efficient vehicles. That has been good news for some of the foreign automakers, but not such good news for some U.S. automakers, for whom SUVs and trucks have been a key source of strength. As the demand for these vehicles dropped, producers found themselves holding unsustainably high inventories. So it's little wonder that they moved to ramp down production. These production cuts slowed overall real GDP growth in the U.S. in 2006. However, once the adjustment to a lower level of inventories is reached, probably in the not too distant future, this factor will cease to hold down growth in the U.S. economy.
