What the increase in RV sales tells us
Source: Marketplace (marketplace.publicradio.org)
Tuesday September 29, 2009
Excerpt from the radio show as seen on the Marketplace website:
Among all the gloomy economic indicators out there, there's one glimmer of hope: motor home and RV sales are up. Joel Rose reports on the RV Index.
Kai Ryssdal: Every day we rely on a mixture of statistics, indexes and projections to tell us whether the economy is up or whether it's down. If things are getting better, or maybe not. Today, in the maybe-not category, we have a group known as the Conference Board. It reported consumer confidence dropped unexpectedly this month.
As we like to do though, we have been looking at a different indicator. And it says maybe things are looking up. Joel Rose explains.
Joel Rose: At Neil's Motor Homes in Los Angeles, sales aren't what they were two years ago. But manager Jim Royal says some of his loyal customers are starting to come back.
Jim Royal: This is their luxury. This is their luxurious toy. They maybe were taken aback at first by the economy, but now they feel, this is what we do. We're gonna go ahead and enjoy our life.
An RV is no small investment in personal happiness. Recreational vehicles start at around $50,000. Mac Bryan is vice president of the Recreation Vehicle Industry Association. He says RVs are among the biggest discretionary purchases consumers can make, which is why they're often an early indicator of the economy's health.
Mac Bryan: When you look at traditional leading economic indicators such as housing starts, money supply, that's about where you find the recreation vehicle sales begin to turn. And that's both going into and out of recession.
Bryan says RV sales started to decline dramatically in May of 2008, long before the economy really began to flounder. And they started recovering months ago. Shipments to retailers were up 16 percent in August compared with July. Indiana economist Morton Marcus says that means RV dealers and buyers are finding it easier to get credit.
Morton Marcus: What it probably means is that banks are finally lending money to RV dealers so that they can reestablish their inventories.
