Not a blog but a "q-and-a" (pronounced "quanda"), this page is about the basics of economics. Its premise: there are no stupid q's. And if some a's seem dim, take heart: I can brighten them up in response to objections, corrections, refinements. Comments on posts feature yours, and my responses. Enough of you now frequent and query the quanda that I post most every day. Haven't seen your q yet? Send it again. All a's should be taken with a shaker of sodium chloride, if not a Lot's-wife's-worth. And speaking of salt, the mustache and "hair" in the photo has a lot less of that condiment, and rather more pepper, than can be seen on TV. Think of it as time travel.
I read that the drop of sales in the RV market could signal the possibility of a recession. How?
Name:
Richard
City & State:
Fort Worth, Texas
Question/Comment: I read that the drop of sales in the RV market could signal the possibility of a recession. How?
Paul Solman: At the simplest level, a drop in the sales of anything could signal a recession. RVs = leisure purchases. If Americans are becoming afraid to make such purchases, then maybe that's a sign they'll cut back on much of their spending. Since consumer spending represents some 70 percent of the whole economy, a cutback would slow factory orders, hotel and airplane bookings, etc.
Those cutbacks would force the companies in question to hire fewer workers, perhaps fire some or, to cite the above question about Harley-Davidson, grant a whole lot of unpaid leave.
If there are fewer workers or, at the very least fewer hours worked, those workers will then have less to spend on RVs, hotels, airplanes, whatever. Then there would be less business overall. Eventually, the economy contracts - fewer goods and services sold than in the previous quarter of a year. When the economy contracts for two successive quarters, that's called a "recession."
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I read that the drop of sales in the RV market could signal the possibility of a recession. How?
**Question/Comment:** I read that the drop of sales in the RV market could signal the possibility of a recession. How?
**Paul Solman:** At the simplest level, a drop in the sales of anything could signal a recession. RVs = leisure purchases. If Americans are becoming afraid to make such purchases, then maybe that's a sign they'll cut back on much of their spending. Since consumer spending represents some 70 percent of the whole economy, a cutback would slow factory orders, hotel and airplane bookings, etc.
Those cutbacks would force the companies in question to hire fewer workers, perhaps fire some or, to cite the above question about Harley-Davidson, grant a whole lot of unpaid leave.
If there are fewer workers or, at the very least fewer hours worked, those workers will then have less to spend on RVs, hotels, airplanes, whatever. Then there would be less business overall. Eventually, the economy contracts - fewer goods and services sold than in the previous quarter of a year. When the economy contracts for two successive quarters, that's called a "recession."
