For those who can remember when music was recorded on vinyl, the Federal Reserve is beginning to sound like a broken record.
For the third time since the Sept. 11 terrorist attacks, the Fed, today (Nov. 6), lowered interest rates 1/2%.
It was the ninth interest rate reduction by the Fed so far this year and, almost certainly, it will result in banks lowering their bench mark prime interest rates to 5%, the lowest level since early 1972.
As was the case with the earlier rate cuts, today’s interest rate reduction will help RV dealers by lowering their inventory carrying costs.
However, whether it will stimulate the economy enough to help RV manufacturers is a debatable point.
Most economists now believe the U.S. is in a recession, so they are focusing on how deep it will be and how long it will last. The U.S. economy shrunk slightly during the third quarter and, due to the sharp increase in unemployment during October, most analysts believe the economy will shrink by a larger amount during the fourth quarter.
Of course, for many potential RV buyers, a recession is a non-event because they accumulated a significant amount of wealth during their careers. So, general economic conditions do not influence their decision whether to buy.
However, for younger families, who generally buy lower priced RV products, particularly entry-end towables, general economic conditions are believed to have a profound impact on whether they postpone their buying decisions.
The next Fed meeting will be Dec. 11.