July 25 - The U.S. economy may ultimately skirt a recession, but it's felt like one for months at Jon Ferrando's 103 RV dealerships.
In a matter of months, consumers stuck at home cut spending on services, as restaurants shuttered and airports turned into ghost towns, and began splurging on goods, especially items like RVs, bicycles, and swimming pools. Anything that made quarantine conditions more tolerable saw a massive surge in demand.
The interest rate consumers pay on loans is well above even that, and RV loans recently have averaged around 10% versus 7% or so before the Fed's monetary tightening kicked into high gear, Ferrando said. With 80% of his company's customers financing their purchases, it was natural that rapid rate hikes would curb buyers' appetites.As demand evaporated, manufacturers hit the brakes.
Downturns in this business have long been considered a dependable recession gauge, but that may not apply this time. "We expect in the second half of this year shipments will start to increase again," Geraci said. The RVIA projects that shipments in North America will rebound to about 350,000 units next year "as consumers get more comfortable with the leveling off of inflation and the level of interest rates," she said.The problem for many dealers is the unsold RVs on their lots.