Rich Karlgaard, publisher of Forbes magazine, provided a positive — yet qualified — take on the current state of the U.S. economy as keynote speaker during the Recreation Vehicle Industry Association’s (RVIA) Annual Business Meeting Wednesday
(June 9) as a wrap-up to formal Committee Week meetings.
At the outset, he summarized, “We are in a recovery and it’s exceedingly uneven.”
He elaborated over the next 30 minutes, tracing how the U.S. economy came tumbling down, starting in December 2007, and argued that “the recession shouldn’t have been worse than the recession of 1990,” which lasted seven months. “This one is worse due to government regulatory failure,” he contended.
Karlgaard likened the current recovery to “two steps forward, one step back” and forecasted real economic growth this year in the 2% to 2 1/2% range with disparities from region to region.
He interrupted his economic remarks to comment that Indiana state government is well run, adding, “I’m going to go out on a limb and say (Ind. Gov.) Mitch Daniels will be the next president of the United States.” He said Daniels “would be a good candidate,” calling him “a real good, pro-growth guy.”
Drawing upon his observations about future trends in business, he said RV companies in particular will do well if they are:
- Good at design. “Really good design will leap out (at consumers) and prevail,” he said.
- Have mastered their supply chain.
On the demand side, he estimated that 70 million of the nation’s 77 million Baby Boomers “have woefully underfunded their retirement,” which “could be good news for the RV industry” as Baby Boomers “pull the real estate card” and sell their vacation homes and turn to RVs instead.
He also speculated that Americans’ growing interest in health and fitness will help the RV industry as workers of retirement age opt to work part-time and travel the country in their RVs.
Finally, he suggested that people will look to companies and products with a purpose built on moral foundations. “A company (or industry) that allows me to make family memories – it’s golden for customers, suppliers and regulators,” he said.
In a short question and answer period, Karlgaard predicted the Republicans will gain 50 to 60 seats and gain control of the U. S. House in the November elections, while winning eight seats in the Senate but fall short of winning that chamber.
This outcome will force President Obama to decide whether he wishes to continue what Karlgaard asserted is a “destructive, anti-enterprise” campaign or move closer to the political center like President Clinton did in 1994 when the GOP gained control of the House.
As for the course of oil prices, Karlgaard surmised that oil will trade in the $60 to $100 per barrel range for the foreseeable future.
The recreation vehicle industry is on the mend with a wholesale shipment forecast that indicates growth of 39% to 230,300 units in 2010. Shipments, according to a new estimate, are expected to grow to 249,700 units in 2011.
Robert M. ”Mac” Bryan, vice president of administration for the Recreation Vehicle Industry Association (RVIA), delivered the new forecast to those attending RVIA’s Annual Membership Luncheon today (June (9) during RVIA Committee Week at the Century Center in South Bend, Ind.
University of Michigan economist Richard Curtin, who prepares shipment estimates for RVIA, had to cancel his keynote speach for personal reasons.
Bryan said the RV industry has recovered from the low 2009 shipment totals of 165,700 units as he presented Curtin’s methodology for measuring and forecasting within the RV market. Many factors are considered including major influences such as consumer confidence, buying conditions, wages and employment, credit availability and wealth effect.
Consumer confidence and buying conditions are improving, while wages and employment will be a slow to improve and credit standards continue to be more strict, Bryan explained.
On the positive side, he said, consumer demand remains strong. “Nothing can diminish this,” he said. “There is a very positive outlook demographically.”
Bryan contended Curtin’s forecasts, initally made 15 months into the future, are fairly accurate. Curtin also looks at RV shipments compared to new private housing starts, car and light-truck sales, and retail consumer sales — all of which have shown an increase in 2010.
“These are good indicators,” Bryan said.
Bryan pointed out that the initial surge in this year’s shipments indicates the need for dealers to ramp up low inventory levels to meet demand.
The forecast for a smaller increase in 2011 reflects the lingering effects of the recession, Bryan said.
“While the RV market has quickly recovered in past recessions, the current journey will be longer and the road will not be as smooth or as straight as in the past,” Bryan said.
According to Curtin’s forecast, three main areas are expected to affect the pace of recovery in RV sales — the financial health of consumers, changes in fiscal and monetary policies, and continued volatility in financial markets.
Here’s a breakdown of Curtin’s most recent estimate:
- Total RV shipments — A 39% increase to 230,300 units and, in 2011, an 8% increase totaling 249,700 units.
- Travel trailers — 140,600 units in 2010 and 151,900 in 2011.
- Fifth-wheels — A 36% increase in 2010 and a 9% increase in 2011.
- Folding camping trailers — A 20% increase in 2010 and a 9% increase in 2011.
- Truck campers — A 26% hike in 2010 and a 17% increase in 2011.
- Class A motorhomes — A 90% spike in 2010 and an 11% increase in 2011.
- Class B motorhomes — A 33% increase in 2010 and a 13% increase in 2011.
- Class C motorhomes — A 61% hike in 2010 and a 6% increase in 2011.