Is The Recession Here? Swimming Pools And RVs Sales Are Telling A Tale
As the market keeps charging ahead, investors have decided to brush off any news that does not comport to the now-consensus economic orthodoxy that a recession will be avoided in the U.S. and Canada.
A key element underlying this projection is that stronger-than-expected employment levels will prompt consumers, particularly high-end consumers, to continue spending, even if the Federal Reserve chooses to raise short-term rates a further 50 basis points before year-end 2023.
Indeed, the consulting firm, Morning Consult, recently published data that the highest-earning U.S. citizens have stepped up their spending in recent months.
However, cracks in the presumed resilience of outlays by high-end consumers are starting to show. One example last week was the revenue and earnings warning issued by Leslie’s Inc. (NASDAQ: LESL), which bills itself as the “largest and most trusted direct-to-consumer brand in the U.S. [swimming] pool and spa care industry.”
It turns out that significantly fewer consumers than Leslie’s expected are in the market for perhaps the most discretionary consumer purchase of all, a new swimming pool. The company issued disappointing preliminary sales and earnings guidance for its fiscal third quarter ended June 30, 2023 and slashed its full-year fiscal 2023 forecasts.
Not surprisingly, the stock has plummeted more than 40% to near an all-time low following the report, before rebounding slightly.
Furthermore, sales of another highly discretionary consumer item, the recreational vehicle (RV), continue to worsen. The Recreational Vehicle Industry Association (RVIA) reports that only 30,919 RVs were shipped in May 2023, down nearly 40% from 50,529 in May 2022. RV unit sales so far in 2023 trail those of every year since 2016 except 2020, when COVID-19 first started to infect the world’s population.
Sales of travel (or towable) trailers fared even worse; May 2023 shipments totaled 20,595, down 42% from 35,213 in the year-ago period. Phrased differently, about 4,000 fewer trailers were sold in May 2023 than in May 2016.
Information for this story was found via RVIA and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
Sales of RVs were up during covid years. RVs tend to be family purchases that are shared among the generations. Now that folks are traveling again on planes and in cars, it doesn’t surprise me that RV sales are down. With regard to swimming pools, discretionary spending post covid is likely diverted away from stay at home recreation to travel.