Wash. Post: Does an RV Downturn Still Signal a Recession?

Wash. Post: Does an RV Downturn Still Signal a Recession?

EDITOR’S NOTE: The following is an excerpt of an article by Bloomberg’s Justin Fox, published by The Washington Post. Click here to read the article in full.

When the US recreational vehicle industry has slumped in the past, it has often been a sign that a recession is on its way. RVs are discretionary purchases, often paid for with borrowed money, so they can signal a softening of consumer demand before it shows up in other spending categories.

Right now, times are tough in the RV business. The biggest manufacturer, THOR Industries of Elkhart, Ind., announced this week that its net sales for the quarter ended Jan. 31 were down 39% from the same period a year earlier. Earnings per share were down 90%, and the company downgraded the outlook for the rest of its fiscal year. Late last month, the RV Industry Association reported that manufacturers’ shipments to dealers were down 61.8% in January compared with those in the month a year earlier.

But is that a sign that a recession is coming, or just that Americans have enough motor homes and trailers for now? After a buying boom that began in mid-2020 as RVs offered a unique means of escape from Covid-19 risks and restrictions, and continued through mid-2022, something probably had to give.

Even now, sales aren’t terrible — as of January, seasonally adjusted real RV spending as estimated by the US Bureau of Economic Analysis appeared to be back to its pre-2019 trend. But the downward adjustment from a sales boom like the one of the past couple of years can still be wrenching.

RV manufacturers did see the declines coming and began to cut back sharply on shipments to dealers in the middle of last year.

Click here to read the article in full.

Source: https://rvbusiness.com/is-an-rv-downturn-the-same-recession-signal-as-before/