Sales of heavy trucks are falling like the U.S. is headed for a recession
Data tracking the sales volume of large trucks in the U.S. is flashing a warning sign about the state of the economy. Heavy trucks sales — or those exceeding 14,000 pounds in gross vehicle weight — have dropped to levels not seen in four years, according to the U.S. Bureau of Economic Analysis. The volume is down more than 15% in August compared with a year ago and 21% compared with the same month in 2023. Economists and investors have historically tracked how much of these vehicles — think tractor-trailers — are being sold in the U.S. as a leading indicator for the economy. That’s because these trucks are considered vital to American manufacturing and building. When truck sales are rising, that can be a sign of growing industrial action. On the other hand, sliding volume can indicate contractions in the U.S. economy — and has historically preceded recessions. “The recent downturn in heavy truck sales, which started in 2023, should be a concern for policymakers,” Joe Brusuelas, chief economist at RSM, wrote to clients in a note explaining the connection between collapsing sales and recessions. The period around the Global Financial Crisis in the 2000s offers a prime example of this trend. Sales volumes plunged more than 67% from a high in 2006 to mid 2009. Looking back further, sales dropped around 50% from a peak in late 1999 to a trough in late 2002 as the dot-com bubble rocked the national economy. But economists noted that it hasn’t always been a perfect indicator of forthcoming recessions. As artificial intelligence reshapes the workforce, some are wondering if the current volume decline can instead underscore the ongoing shift in the economy. “The weakness certainly reflects a slowdown in the manufacturing sector,” Paul Hickey, co-founder of Bespoke Investment Group, wrote to CNBC. But, “the fact that the overall economy continues to grow is a further signal of the evolving nature of the economy more towards services and digital activity as opposed to manufacturing.” In other words, Hickey said it could be a sign of the “bricks to clicks” change in the U.S. economy. That refers to the shift in growth from industrial roles that can involve literal bricks to technological sectors tied to the internet. “Falling sales are often a recession indicator,” Hickey said. “The key word is often.” Still, heavy truck sales rebounded to near highs following a pandemic dip even with the ongoing technical transformation of the economy. So the recent drop this year must have something to do with the state of the economy. Investors will soon find out whether it’s just a slowdown or something bigger.