Investors looking for signs of a recession might want to focus their attention on recreational boating and mega-yacht sales, an industry that tends to decline ahead or during economic turning points.
The National Marine Manufacturers Association (NNMA) is worried about a weakening consumer next year. So far, sales are up for personal watercraft, wake sport boat, and larger fiberglass boat sales, but there's a notable decline in freshwater fishing boat sales.
In recent quarters, the manufacturing recession has successfully transmitted weakness into consumers and services. Ten months of an employment slowdown, consumer confidence is expected to shift lower in 1H20. Deteriorating consumer confidence could lead to slumping boat sales in 2020, which would be another warning sign that a recession is ahead.
Superyacht dealers are also seeing a slowdown in sales because the ultra-wealthy are spooked by the real threat a global trade recession could arrive sometime next year. The ultra-wealthy are usually in the know of economic turning points, way ahead of the average person. They're sometimes the smartest money in the room, and make moves before the broader shift occurs. And perhaps, the rich, abandoning their love for yachts this year is also another sign that a domestic and global slowdown will persist into 2020.
Bloomberg notes that superyacht dealers have reported only 102 sales through September, which is likely going to come in significantly weaker than the 199 sold in all of 2018.
Thom Conboy, a superyacht broker for Dutch shipbuilder Heesen Yachts, said wealthy clients purchase yachts based on confidence in the global economy, and if there's turmoil around the world, the clients don't buy.
Boating is a luxury; it all comes down to the disposable income of the middle class and ultra-wealthy consumers. So when pessimism and uncertainty unfold across the domestic and global economy, spending on boats and yachts tend to decline.
It seems that the boating industry could have a demand issue in 2020 when the global economy is expected to stumble into a trade recession.
Must be nothing...