I guess we should all be prepared for a spate of articles using various home-brew metrics to predict whether a recession is near. You know the drill: sunspots, hemlines, banana consumption, whatever. Today the Wall Street Journal takes a look at RVs:
Shipments of recreational vehicles to dealers have fallen about 20% so far this year, after a 4.1% drop last year, according to data from the RV Industry Association. Multiyear drops in shipments have preceded the last three recessions. “The RV industry is better at calling recessions than economists are,” said Michael Hicks, an economist at Ball State University, in Muncie, Ind. Mr. Hicks says softening consumer demand for RVs coupled with rising vehicle prices due to tariffs suggests the economy is either in a recession or soon headed for one.
Wait. What’s this about rising prices due to tariffs?
RVs can range in price from about $12,000 for a folding camping trailer to $212,000 for a high-end motor home, according to average retail prices collected by the RV Industry Association. The prices have been sensitive to the U.S. tariffs imposed on some Chinese goods. The industry estimates that as many as 523 items could be hit by the tariffs, everything from the toilet-seat covers that go into RV bathrooms and cow hides for leather furniture to the aluminum or steel used throughout the vehicles.
Divya Brown, the president of Houston.-based TAXA Outdoors, a small RV manufacturer, said her company bought most of its parts from Elkhart. Her suppliers are raising their prices to account for the hit they are taking from imported goods such as aluminum and steel. Ms. Brown said the company saw a 22% jump in the cost of steel and a 9% jump in the cost of aluminum.
So there you have it. The yield curve has inverted and business is bad in Elkhart, Indiana. We are all doomed.