almost 2 years ago • 1 min
Sales of new heavyweight trucks have peaked before every recession since the 1970s, making it almost as reliable an indicator as ol’ faithful, the yield curve. But here’s the thing: sales are currently sitting well below five of their six previous peaks. That suggests a recession isn’t on its way, and flies in the face of the yield curve’s significantly more bearish signaling.
Here’s why truck sales are such an effective indicator. More than two-thirds of freight is shipped by truck in the US, which means they say a lot about the current demand for goods and the strength of consumer spending. They also indicate business sentiment: more sales suggest there’s more optimism for the economic outlook, since companies could just have repaired their existing trucks or bought used ones. So when sales top out, it suggests that both demand and optimism are starting to turn, which tends to come at some undefined point prior to an economic recession.
So where are we now? Well, you can see in the chart above that the market is going from strength to strength, but that we’re a long way off the peaks we’ve historically seen. In other words, there might be quite a bit of open road before we get to a recession.
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