Old-RV'er
RVF Expert
- Joined
- Feb 23, 2020
- Messages
- 500
- Location
- Blairsville, GA
- RV Year
- 2019
- RV Make
- Newmar
- RV Model
- Ventana 3407
- RV Length
- 34'10"
- TOW/TOAD
- 2013 Jeep Wrangler Sahara Unlimited
- Fulltimer
- No
We've got another eye on the 'RV indicator'... All my short comments below - We sold ours, and glad it is gone, sorta miss traveling, and then I drive to town and that cures me.
Paid-up subscriber Joe G. recently wrote in with this idea worth sharing and checking in on...If you want to see where the economy is heading, look no further than the unemployment rate in Elkhart County, Indiana. In the past, as the unemployment rate goes higher the economy goes lower. Due to Elkhart County having a large manufacturing base through the Recreational Vehicle business, it is usually the first to go into a recession and the first to come out of a recession. Just my thoughts after living there for 64 years. Thank you.
Thank you, Joe. I love looking at economic indicators like this from the real world.
Sales of recreational vehicles ("RVs") have long been seen as a leading indicator of the health of the American consumer. There is a good argument to be made that it is an overused indicator, like if analysts make too much of a short-term dip in RV sales, for instance... But you bring up a great point, Joe, about looking at the unemployment rate where many RVs are made.
First off, for context for everyone, Elkhart County in Indiana produces about 50% of the RVs on the road today, according to county officials, and the region is responsible for upwards of 80% of global RV production, given Americans' preference for using them more than anyone else.
Elkhart County is home to factories for publicly traded companies like Thor Industries (THO) and Winnebago Industries (WGO), along with privately owned or family-operated businesses like The RV Factory, Gulf Stream, and more.
According to Elkhart's visitors bureau...
How did it all begin? Wilbur Schult, a dynamic promoter and retailer, bought Elkhart's Sportsman Trailer Company from Milo Miller in 1936. Schult was such a promoter that by 1939, he was the largest manufacturer in the industry and Elkhart was beginning to attract lots of suppliers and more manufacturers. In addition, Elkhart's major highways and railroad transportation links and central location to large metropolitan markets made it accessible for easy shipment of goods. By the late 1940's, when things began to boom again after the war, industry magazines began calling Elkhart the "Trailer Capital of the World".
Eighty or so years later, it's still the RV capital of the world.
Today, you can tour many of the RV factories and even visit the RV/MH ("Manufactured Housing") Hall of Fame, located in the county. Now that I've shared some local history and free tourism information, let's take Joe's advice and look at the unemployment data...
A year ago, the unemployment rate in Elkhart County was the lowest in the nation at less than 2%. And while it has gradually risen over the past 12 months, it had stayed below the national average. Not anymore...
The unemployment rate in Elkhart just spiked...
The RV-manufacturing hub's unemployment jumped to 4.9% in January, the most recent data that the U.S. Bureau of Labor Statistics released last week. That's up from just 2.5% a month earlier – nearly double. After that startling rise, it's now above the national average of 3.6%.
Now, the RV industry of course boomed during the pandemic as more and more people sought their freedom from COVID-19 and other things. So there's bound to be significant cooling as this turn in the business cycle arrives.
However, the same can be said for the broader economy in general. Come to think of it, since so many other sectors also relied on pandemic-related trends, there actually might not be too many more relevant indicators than what's going on in the "RV Capital of the World."
To this point, Thor Industries recently cut its sales and earnings outlook, pointing to slowing sales because of sagging demand it attributed to inflation. Rising interest rates have also increased the cost of financing big-ticket items like RVs.
This is ominous news...
This chart shows the unemployment rate in Elkhart County since 1990. The gray areas indicate "official" recessions, and you can see the new spike to near 5% in the lower right corner...
The last time the unemployment rate in Elkhart County moved that dramatically higher is when it topped 30% in April 2020 amid pandemic shutdowns.
Before that, the last times it increased more than 2 percentage points in a month's time were amid the Great Recession. It rose from 6.8% in June 2008 to 9.6% that July... and from 16.2% in December 2008 to 19.8% in January 2009.
Back then, unemployment in Elkhart went on to peak at 20.6% in March 2009.
Perhaps not coincidentally, March 2009 is the same month when the U.S. stock markets finally hit financial-crisis lows... On March 9, 2009, the benchmark S&P 500 Index closed down roughly 50% from its top in October 2007.
That's the bad news...
The good news is the S&P 500 then gained 60% through the end of that year as things got "less bad."
So, if the unemployment spike in Elkhart is a sign of things to come ahead for the broader economy, it seems like most people could be caught off guard dramatically in the months ahead... And if you're a believer that it will matter for stock prices, things could get worse for stocks before they ultimately get better over the long run.
We can't know for sure what will happen next or the precise timing... But the "RV indicator" certainly has my attention that more trouble for the economy could be ahead, or at least maybe more trouble than many observers want to believe today. Still, there are also signs that a more friendly Fed environment could be on the way, too... And that could help stocks in the shorter term.
"I remember 2005, RV sales were starting to falter, but National RV was buying up companies like well that "sailor we hear about". They filed for bankruptcy in 2008, taking with them some of the best RVs in the business at the time. I do not know the balance sheets on Newmar, Thor, or Winnebago now. But, if like most of us hard workers and savers, I suspect if you if have "one on order", are looking at that expense very hard. As mentioned, miss the travel, not the hassell of traffic in large cities, nor having to make reservations well into advance cycles, unless things have changed. I hope all are having fun and enjoying life. Diesel here is still well above 4.00 gallon, and gas went up, even though oil is down by 10 a barrel."
Blessings and happy travels!
