What the RV Recession Indicator Tells Us

Making 65% of the nation’s recreational vehicles, the area around Elkhart, Indiana is the self-proclaimed RV capital of the country. So, when its numbers dip, people notice.

Below, the gray-shaded recession lines and the shipments graph show their correlation:

Where are we going? To predicting a recession.

A Recession Indicator

Declining RV numbers could be a warning that bigger economic problems are imminent. Or, as one dealership owner explained, “You need food, you need clothes but you don’t need an RV,”

In the following graph, RV shipments decreased by 4.1% during 2018 while so far this year, the decline is 20%:

Priced somewhere between $12,000 and $212,000, an RV purchase decision combines psychology with practicality. First, when consumer confidence slides, RV demand goes down. In addition, the tariffs that sent aluminum prices up by 9% and steel by 22% could affect a whopping 523 RV items that range from appliances to furniture, and leather seats to toilet covers.

Our Bottom Line: Recession

The National Bureau of Economic Research is responsible for telling us when we have experienced a recession. Many of us assume (including me) that they look at whether the GDP has declined for two successive quarters. They say though that they do not.

Instead, they look for the following:

• a significant decline in economic activity spread across the economy,
• a decline that lasts more than a few months,
• a decline that is visible  in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Based on their criteria, we’ve experienced seven recessions since 1970. (I’ve included the 1980 recession.):

Perhaps Elkhart is sending us a signal?

My sources and more: Thanks to the daily WSJ podcast for the RV Indiana article it referenced alerting me to a recession indicator. From there, for more on recessions Vox and the NBER website are ideal possibilities.

Our featured image is from WSJ.