By Rodrigo Campos

NEW YORK (Reuters) - Forget the jobs report. The most interesting bit of U.S. economic data next week is Monday's auto sales release, which will offer a measure of the middle-class consumer and a sector of the stock market that has had a rough ride so far in 2017.

Economists are looking for another solid month of sales north of 17 million new vehicles at a seasonally adjusted annualized rate for March but nothing like the 18.4 million hit in December, the highest since August 2005.

The number would however point to a third consecutive decline on a 12-month rolling basis. With sales peaking and prices set to drop, the secondary effects are expected to be felt beyond car makers and dealers.

Lease and used-vehicle prices are expected to fall sharply this year, according to Ally Financial, which cited its estimate earlier this month when it lowered its 2017 profit forecast.

Morgan Stanley said in a Friday note used-car prices could tumble between 25 and 50 percent by 2021, with both new cars and off-lease supply hitting record highs this year.

"There's an avalanche of used cars ready to hit the market place," said Brad Lamensdorf, co-manager of the AdvisorShares Ranger Equity Bear ETF.

According to Lamensdorf, the need to move inventory has translated into reckless lending. "It's not fraudulent, but people are up to their neck in debt," he said. "Default rates are going to be much more significant."

The stock market is taking note. The S&P 1500 automotive retail index <.SPCOMAUTR> is down 6.5 percent year to date, with Advance Auto Parts <AAP.N>, AutoNation <AN.N> and Sonic Automotive <SAH.N> down double digits in 2017.

Carmax <KMX.N>, which reports earnings on Thursday, is seen as a bellwether in the used-car industry. Its stock is down 8 percent so far this year.

Another red flag from the sales floor: the average number of days a new vehicle sat before being retailed hit 70 in the first 19 days of March according to a note from J.D. Power and LMC Automotive. That is the highest since July 2009.

With the market tightening, industry insiders expect more price cuts.

"The competitiveness of the industry continues to be evident in ever-rising incentive levels," said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power in a note.

"Incentives will reach a new high for the month of March."

At the same time, competition to finance loans is likely to further increase credit risk for auto lenders, Moody's Investors Service said this week.