It happened again! Just as in 1990, 2000 and 2007, a decline in recreational-vehicle shipments preceded a recession.
Of course, unless you believe that RV dealers knew back in summer 2018 (when the shipment decline began) that a new coronavirus would emerge from China a year and a half later and bring the global economy to a standstill, there’s no plausible connection between the RV swoon and the recession that started in March. As with the warning signal supposedly flashed by last year’s inverted yield curve, RV shipments will look like they again passed muster as a recession indicator, but they didn’t really.
The theory had been that, as big-ticket discretionary items, RVs were among the earliest warning signs of softening consumer demand. “They didn’t predict Covid, but I think they did a pretty good job forecasting the manufacturing quasi-recession we had in 2019,” emails Michael Hicks, an economics professor at Ball State University in Muncie, Ind., who has been watching the industry’s ups and downs closely. “I just don’t think a manufacturing slowdown in 2019 was sufficient to drag the aggregate economy into recession.”
So by late last year, RV shipments were rebounding and no recession was in sight. Then came the coronavirus, and a collapse.
Now, the industry seems to be playing the unfamiliar role of early mover in a recovery. In April, the stocks of RV makers THOR Industries and Winnebago Industries, parts-maker Patrick Industries, and retailer Camping World Inc. began outperforming the small-cap Russell 2000 Index, to which all but industry leader THOR belong. Since Camping World’s chief executive officer declared in a May 7 earnings call that the first Friday, Saturday and Sunday in May had been “the biggest weekend in our company’s history, period end of story,” they’ve taken off.
Click here to read the full analysis from Justin York of Bloomberg, courtesy of Yahoo Finance.