On the road again: RV sales see an upswing

— -- A closely watched report Tuesday on consumer confidence is expected to show modest improvement, but some economists are heartened by a more obscure measure of buyer sentiment: recreational vehicle sales.

RV wholesale shipments jumped 16% in August from July to a seasonally adjusted annual rate of 209,800, the Recreation Vehicle Industry Association reports Tuesday.

While that's about half the industry's torrid sales pace in 2006, it's a 136% surge from January. The trade group predicts 146,200 shipments in 2009 and a 27% increase in 2010.

Sales of motor homes and travel trailers are seen by some economists as a leading indicator of the economy's health, because they're among the largest discretionary purchases a consumer can make.

Trailers cost about $6,000 to $60,000, while motor homes — which include a living space within a vehicle — typically fetch $50,000 to $300,000. About 8% of U.S. households, mostly families and retirees, own an RV.

RV sales began dipping in early 2007, many months before overall retail sales declined and the recession's start in December of that year. In recoveries, camper sales often heat up early, as buyers who put off purchases grow optimistic enough to open their wallets.

"Prospects that we talked to a year ago, even in spring of 2008, are now beginning to come out and buy," says Scott Hayden, president of Driftwood RV, the largest RV retailer in New Jersey.

After plunging by a third in 2008 and early this year, Driftwood sales in September are 15% ahead of a year ago and up 4% vs. September 2007.

Industry officials attribute the rebound to improved credit for dealers and consumers, low dealer inventories and stable gas prices. The big driver is rising buyer sentiment, which could augur more robust retail sales than predicted.

"It would suggest the worst of the (stock market) decline seems to be over, and the consumer is in a position to come back," says Indiana economist Morton Marcus, who studies the RV market.