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While 2001 was the year of interest rate cuts, it’s beginning to appear that 2002 will be the year when interest rates are left unchanged, but at a low level in an effort to stimulate an economic recovery.
The Federal Reserve Board voted again today (May 7) to leave interest rates unchanged, which means the prime rate will remain at 4.75%, its lowest level since 1972.
While the Fed cut interest rates 11 times during 2001 in an effort to avoid a recession, it has left rates unchanged during each of its three meetings so far this year.
During its meeting today, the Fed, once again, said it believes the risk of higher inflation is balanced by the possibility of a recession.
Since March, the economy has strengthened because businesses are replenishing their depleted inventories. But the Fed is uncertain whether retail demand will be sufficient to make inventories turnover at an acceptable rate, it reported today.
In the RV industry, wholesale deliveries and retail sales were strong during January and February, at least when compared with the first two months of this year. RV retail sales data for March is not yet available but wholesale shipments slowed in March.
However, many RV dealers are reporting 20% sales increases through the April, suggesting that materials, components and labor shortages might be preventing RV manufacturers from building units fast enough to satisfy dealer demand.
Delivery company driver shortages might also explain why shipments of all RV product categories, except for Class A motorhomes and conventional and hybrid travel trailers, were flat or down slightly in March, when compared with March 2001.
The next regular Fed meeting is scheduled for June 25-26.