ELKHART, Ind.— As the debate continues over which signals are the true bellwethers of the economy’s future, one economist believes the declining shipments of recreational vehicles deserves attention.
More than 80% of recreational vehicles sold in the U.S. are produced in Indiana, and roughly 65% of those come from Elkhart County, which often bills itself as the “RV Capital of the World.”
According to new data, wholesale shipments of RVs are down 20.3% to date in 2019, with companies such as Thor Industries slashing output and cutting back the work week to slow production, according to the Indianapolis Star. But others are cautioning that tariffs put in place by the Trump Administration are contributing to the slowdown.
Ball State University economist Michael Hicks is reminding consumers don’t purchase RVs and other big-ticket items when money is tight, or when the economy is contracting. Total U.S. auto sales also declined 1.8% year-over-year in July, according to industry consultants JD Power and LMC Automotive.
Since 1982, when RV sales were first recorded, Hicks said all three recessions (1990-1991; 2001-2002; and 2007-2009) had two consecutive years of negative sales growth, Hicks said. In 2018, sales from manufacturers to dealers dipped 4% and have gone down nearly 20% in the first six months of 2019.
"I think [the recent sales declines are] largely due to increased costs, due to the tariffs imposed on Chinese imports, which comprise a very big portion of RV manufactured inputs," Hicks said.
Industry, Congresswoman Respond
Kevin Broom, a spokesperson for the RV Industry Association, told the Indianapolis Star, “There is the wild card of the tariffs and the trade dispute being thrown in the mix, and it’s difficult to tease out how much of an impact those are having right now,”
The association is predicting that shipments for the year will be down about 14% at the end of 2019. RV shipments have dropped in five periods since 1981, but only three of those periods were followed by recessions, Broom said.
Rep. Jackie Walorski, who represents Indiana's 2nd Congressional District, downplayed concerns during a tour of the RV manufacturers in Elkhart, said, "Do I think this is having anything to do with folks talking about recession? Absolutely not. This economy is raging. When you look at things like RV sales, boat sales, things that are made in our district that people are purchasing, they're still purchasing."
Walorski said the recent repeal of the Section 232 tariffs on steel and aluminum will ease the pain that was experienced in Elkhart County, but added, “I still spend 24/7 of my waking hours making sure that we get these tariffs off as fast as we can. So, some of those have been rolled off. There’s more to come.”