Monday, June 14, 2010

Truckonomics: Truck Sales Shift Into High Gear

The retail sales report for May was generally considered to be a disappointing sign that the economic recovery was stalling, as consumers unexpectedly "ratcheted back spending on everything from cars to clothing in May," according to the WSJ.  But on both a year-to-year basis, and year-to-date basis, vehicle sales are booming, rising by 19.1% in May this year vs. May last year, and by 16.6% year-to-date compared to 2009 sales through May (data).  So we maybe shouldn't give up yet on the American consumer, and here's a report about robust consumer spending in May on an important economic indicator: trucks (see related CD post here):
NEW YORK (AP) – "If you want a hint about the economic recovery, follow that truck. Pickups are a kind of rugged indicator of the nation's financial health. When times are good, contractors buy more of them to carry tools around for landscaping and lumber to build homes. Weekend haulers also gravitate to them even though cars get better mileage.

And lately sales have started shifting into a higher gear. Americans bought 151,000 pickups last month, 19 percent more than a year ago. Sales of full-size pickups, especially popular among contractors and builders, grew even faster.  This year, pickup sales have been gaining momentum. Through May, Americans bought 11 percent more than they did in the first five months of last year and the sales pace has been accelerating."


At 6/14/2010 8:59 AM, Anonymous morganovich said...

this is more testament to how bad last year was than how good this one is.

it's easy to find big YOY comps in lots of things right after a huge drop.

how do these compare to good years like 2005-6?

At 6/14/2010 10:04 AM, Blogger juandos said...

"YOY comps"????

What is the meaning of that phrase morganovich?

I really don't know how valid these stories are but...

From the AutoChannel dated July 10, '06: Slow Pickup Sales Hurts Detroit Automakers

From dated Oct. '05: Truck sales fall; car sales go up

At 6/14/2010 10:09 AM, Anonymous gettingrational said...

"So we maybe shouldn't give up yet on the American consumer, and here's a report about robust consumer spending in May on an important economic indicator: trucks..."

I think pick-up truck sales should NOT be a robust indicator of consumer spending. They are a robust indicator of investment by business people in the production of goods and services. A lot of people who were buyers of pick-ups, in the consummerism bubble of the previous decade, were merely posers potraying an image and not using the truck for prodction. At this point in the recovery truck sales are a Capital Investment.

At 6/14/2010 10:33 AM, Anonymous morganovich said...

YOY = year on year, so change this year vs last.

At 6/14/2010 11:02 AM, Anonymous morganovich said...


as i think about it, what's the relationship between gasoline prices (which have been dropping of late) and sales of pickup trucks as a share of light vehicles?

it seems plausible that a drop in gasoline prices would improve sales of lower fuel economy vehicles (such as trucks) but i've never actually seen any data on it.

nor have i seen any data showing the relationship between truck sales and future economic output or truck sales and a variety of other influences.

dr perry, you often post vignettes like this as signs of economic activity, but very rarely actually take a rigorous look at whether truck sales or leading indicators or the fed model or the vix act in a significant predictive capacity or demonstrate any kind of correlation to growth or employment.

this is not to say that such correlations do not exist (though i have serious doubts about the fed model and know that the vix is not a leading indicator), but rather that it would be very interesting to see them.

it's one thing to make armchair claims, but another to provide some rigorous analysis. as an economics professor, this would seem to a type of project to which you (and perhaps your students) are well suited and might really add to the blog.

just one man's opinion of course, but i'd certainly like to see it.

rigorous analysis of what these indicators can and cannot do would be as useful as it would be interesting.

At 6/14/2010 11:57 AM, Blogger McKibbinUSA said...

Maybe the government can provide a hefty tax credit to Americans who purchase a new full-size US-built truck in the next year -- the US needs to get back to what it's good at -- building and selling BIG trucks!

At 6/14/2010 12:33 PM, Anonymous sprewell said...

Mark, looks like someone at the FHFA has been paying attention to your and Kling's posts about the 30-year mortgage.

At 6/15/2010 1:49 AM, Blogger Ron H. said...

morganovich said... - "it seems plausible that a drop in gasoline prices would improve sales of lower fuel economy vehicles (such as trucks) but i've never actually seen any data on it."

That seems awfully short sighted on the part of buyers. Surely no one expects gas prices to remain low for an extended period of time. There must be some other reason for increased sales.

Maybe buyers are feeling they had better "get it while you can", before future more stringent CAFE standards cause the demise of the pickup as we know it. Future light trucks might have tiny four cylinder engines that won't allow them to get out of their own way.

At 6/15/2010 8:45 AM, Anonymous morganovich said...


don't forget that oil still costs less than half of what it did in 2008 and that that period was characterized by pundits calling $150-200/bbl oil the new normal.

that was certainly enough to freeze truck spending.

i don't think many folks are expecting a near term move back to those levels.

At 6/15/2010 2:06 PM, Blogger Ron H. said...

morganovich, you're right. I do remember pundits making those silly calls. We're lucky that they can only talk about things and have no actual power.

At that time, the oil companies called it correctly as an anomaly, and didn't increase spending for exploration or development.

These days, I'm more concerned with our Socialist-In-Chief whose every action seems designed to make our energy costs "necessarily skyrocket", including oil.


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