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Thursday, March 28, 2024

Heavy Truck Sales vs. GDP: Sales Plunged 29% in August from Year Ago

Courtesy of Mish.

There’s an interesting correlation between heavy truck sales, GDP, and the S&P 500. If the relationship holds, it spells bad new for the already weakening second half recovery meme.

We’ve never seen a plunge this steep that didn’t foretell a recession,” says Bloomberg columnist David Ader.

Bloomberg reports As Heavy-Truck Sales Go, So Goes the Economy

For most people, the economy’s ups and downs are best measured by famous indicators like monthly job reports and quarterly releases of gross domestic product. But students of the arcane took special notice earlier this month when the Bureau of Economic Analysis released some disturbing data that didn’t make anybody’s front page. In August, domestic heavy-truck sales fell 29 percent from the same period of 2015, the weakest month in well over three years.

Any drop that dramatic could always be an anomaly, but heavy-truck sales have been slipping for two years. Broad weakness in this category has historically been a reliable hint that a recession is on its way.

There are other worrying signs. Caterpillar has said that used-machinery prices are down 10 percent from a year ago. That could also reflect the impact of oil and mining industry problems, yet a price decline in used construction equipment could have a dampening impact on new-equipment sales for big manufacturers.

Another warning comes from the Cass Freight Index, a measure of North American freight volumes and expenditures. In August, Cass noted that its Expenditure Index was down 3.3 percent from July and 6.3 percent from the previous August. These measures, too, have shown weakness over the last two years.

Weak truck sales have sometimes given false signals about a recession over the last 30-odd years. But the sheer size of this August’s drop looks different. We’ve never seen a plunge this steep that didn’t foretell a recession.

Hitting the Brakes

hitting-the-brakes

Truck Sales vs. S&P 500

Bloomberg had a story on Heavy Truck sales. If you’re wondering how this relates to stock markets, check this out. pic.twitter.com/XXuFCOc1jI

— VP Research (@VrntPerception) September 29, 2016

Cass Freight Index

I regularly follow the Cass Freight Index. It has indeed been performing miserably.


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