RV Sales as an Economic Indicator

BY Brian Loftus
1/28/2020 - HVAC Market Intelligence


Watch the business news or read the financial press and you see that there are enough economic indicators available to support most reasonable opinions. The US Leading Economic Index supports the opinion of those who believe 2020 will be another slow growth year. Those who believe the risk of a recession is rising, prefer to exclude the stock market performance component of the LEI for a more pessimistic conclusion after the yield curve inverted during August 2019. The business media is built on debating the implications of conflicting metrics and relationships. Going on a road trip allows time to ponder these thoroughly engrossing economic mysteries. Your choice of ride can be an important clue.

Did you know that RV shipments have been a reliable economic indicator? The green bars in the chart are the annual shipments that have declined before the past three recessions. Conceptually it makes sense that the volume of big-ticket purchases would reflect consumer’s experience and perception of economic stability or prospects. Calendar year RV shipments declined by 13% in 1989 before the 1990 recession, by 6.6% in 2000 before the 2001 recession, and by 9.5% before The Great Recession. RV shipments began to fade in 2018 and are off by 15.9% for the twelve months through November 2019. Could this time be different?


Two-thirds of the nation’s RVs are produced near Elkhart, Indiana, so investigating employment in that area could provide some early insight into the effectiveness of this indicator for 2020. The green line in the second chart is the unemployment rate in Elkhart that increased before the recession in 2001, but after the start of the other two recent recessions. The Elkhart unemployment rate was 3% at the end of 2016, dipped to the 2.3% area Q4-17 through Q1-18, and has recently returned to the 3.0%-3.1% area.

Those who believe the Inverted Yield Curve indicator may interpret a nearly 50% increase of the unemployment rate, as well as the production cuts and shorter work weeks at RV manufacturers in the area, support their conclusion that a bumpy economic road is on the horizon. Others could conclude the stable unemployment supports their decision to have four flat screen TVs in their new ride instead of just two. The undecided can hit the road and count the RVs along the way and in the dealer lots they pass.

This article was featured in our monthly Data Driven Newsletter. If you would like to receive these monthly emails, click here to sign up.

If you have any questions, or would like to suggest a featured topic for next month's DDN, contact Brian Loftus at bloftus@hardinet.org.