Dear Reader,

The economic news today is honestly, baffling. While consumer confidence fell for the third month in a row, consumer spending rose. But what’s strange, is what the Americans consumer has decided is important to spend and go into debt to buy.

Traditionally, we would expect healthcare to provide the bulk of the upside as a part of America’s aging demographic and the Obamacare tax. But strangely enough, in the third quarter (Q3) we found only a relatively modest contribution, with a spending increase of only $9.5 billion compared to Q2.  Another surprise was that at a time when restaurant sales are starting to sputter, spending on food and drink purchased outside the home somehow increased by $16.5 billion in the quarter.

But what was the main driver of spending in the third quarter? Well, for some inexplicable reason, in Q3 the American consumer was scrambling to buy… recreational vehicles. As personal debt skyrockets and consumer confidence wanes, spending on wants as opposed to needs is still skyrocketing.

It is also worth noting, that if it wasn’t for the inexplicable splurge on “Recreational goods and vehicles”, GDP would have missed expectations of a 1.6% increase, as spending in the category rose by $23.2 billion, more than a quarter of the entire $93.6 BN increase in consumer spending in Q3. To be sure, the farcical surge in RV purchases certainly would explain why the housing recovery has turned from boom to bust.

This is very strange data considering the RV industry has already taken a massive blow thanks to the trade war with China. President Trump’s tariffs on steel and aluminum and other retaliatory duties on thousands of Chinese-made RV parts, from electronics to LED lights to vinyl have taken their toll on the industry.

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    Could the data be cooked? Possibly.  It sure looks like something is wrong here especially when you look just a little deeper. Domestic shipments of RVs to dealers plummeted 22% in the first five months of this year, compared to the same period last year, after dropping 4% in 2018, according to the Recreational Vehicle Industry Association. As ZeroHedge pointed out, “the RV industry’s crisis shows how President Trump’s trade war has backfired, hurting the industry he promised to protect.”

    Michael Hicks, a Ball State University economist who tracks the industry, warned that the collapse in RV shipments could indicate a wider economic downturn as well, noting the plunge in sales. Hicks said shipments had fallen sharply just before the last three U.S. recessions.

    “The RV industry is a great bellwether of the economy,” said Hicks, because the vehicles are an expensive and discretionary purchase, easily delayed by consumers who start to worry about their financial stability.

    So what the heck is going on? The obvious answer is the one that no one wants to hear.  There’s some number fudging occurring by the U.S. government. When it comes to this level of data manipulation, it likely is coming from the top. The president has a political axe to grind and will steamroll any and all data just to prove that America is great again.

    The entire point of all of this is to educate anyone who reads this. Look deeper. Do your research. And prepare yourself and your family for what could be a long and bumpy road in the future.

    Best Regards,

    James Davis

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      Legal Notice: This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.