Redneck Economic Indicators

Thanks to the internet, I can read about a lot of things that I really don't understand. One of these things is what is called "the inverted yield curve." Seems it is a fairly accurate predicter of a recession. For those of you who are like me and don't know a lot about such things, we have an inverted yield curve when the interest rate paid on 30 year government bonds is lower than the interest rate paid on 90 day government bonds, or is it 1 year government bonds? Anyway you get the picture. Short term bonds paying a higher rate than long term bonds.

I don't know much about government bonds. Until I was middle aged, the only bond I knew anything about was what my parents called "war bonds." Needless to say, the inverted yield curve is a somewhat abstract indicator where I come from.

Don't worry about us Rednecks though. We have our own set of indicators. My personal ones are pickup trucks and travel trailers. I can drive up and down US Hwy 31, 231 and 280 and get a pretty good idea of how the economy is doing. How you say? By observing the number of pickup trucks and travel trailers that are sitting on the side of the road with for sale signs on them. The more of them that are for sale, the worse the economy is. Of course, in the case of the travel trailers you have to do a little seasonal adjusting cause there are always more of them for sale in the offseason.

I don't know exactly why it works but I have a theory. It has to do with who the recession affects the most. It does not drastically change the life style of the poor people. They already have it tough and anyway they can't afford travel trailers. It does not dramatically affect the rich people, they just use their class A motor home less frequently. Nope, it affects the middle class. The folks who have pickup trucks as their second vehicle, unless they are like me and have a pickup truck as their primary and second vehicle. They are the ones who opt for travel trailers instead of motor homes cause travel trailers are cheaper and can be pulled by one of their other vehicles, usually their pickup truck. They are the ones that feel the affects of the recession first. They have to cut back so they sell their travel trailer and may have to sell their second vehicle, the pickup truck. It cuts back on tag, insurance and fuel expense and generates some much needed temporary cash flow.

As a point of information, the last time I checked, the yield curve was inverted and there are a lot more pickups and travel trailers for sale than there were this time last year.