RV sales are an under-the-radar bellwether for the health of the broader economy - and they're tanking in 2023
- There's an under-the-radar indicator of economic health that's flashing red in 2023.
- Sales of RVs are on the decline this year, pointing to a weaker consumer and a softer economy.
There are a lot of indicators that experts like to scrutinize to get a sense of how the economy is doing. Housing is a big one, as well as prices for commodities like copper for its view into manufacturing activity. Even cardboard boxes tell a pretty clear story.
But some indicators are a little less obvious. What, for instance, could data on the sale of recreational vehicles tell us about the health of the broader economy? According to some experts, quite a lot it turns out.
An article from the Financial Times on Monday notes that RV sales are a "classic disposable income and interest rate sensitive item," as one economist puts it. In other words, when money is cheap and things are looking good for consumers, people borrow to buy an RV and hit the road.
Michael Hicks, a professor of economics at Indiana's Ball State University, tells the FT that RV sales are actually better than economists at predicting a downturn.
That might be bad news, as sales of recreational vehicles are down more than 50% in 2023, according to data from the RV Industry Association. However, like many sectors and industries, the RV market was heavily distorted by the pandemic, and this year's sagging sales could just be a normalization after a COVID-fueled buying spree.
The FT article notes that RV sales are a flashpoint in economists' quest to interpret an increasingly confusing environment. Amid the Federal Reserve's rate hikes, a smoking-hot labor market, and inflation that's still uncomfortably high, policymakers and normal folks alike have a lot to consider.
Unemployment is the lowest since the 1960s, ostensibly a good thing for the economy, but it may also be helping to keep inflation elevated. The economy is full of such conundrums these days and it has made forecasting a lot harder.
Wall Street is heavily divided on recession odds, and corporations are defying calls for an earnings recession by powering through this reporting season with much more upbeat results than had been feared.
There hasn't been a recession so far, despite Fed tinkering, but one may be close at hand. In the meantime, RVs, eggs, and cardboard boxes might be the indicators to keep the closest eye on.