Here's What a Jump in Pickup Sales Says About the U.S. Economy

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Rapidly increasing sales of Ford Motor Co. (NYSE: F) pickup trucks signal an improving outlook for the U.S. economy, particularly the agriculture and construction industries.

The pickup sales growth is one of those unconventional economic indicators that can give investors a deeper insight into what's really happening in the U.S. economy.

That's because most pickup trucks are purchased by people working in the construction trades or agriculture.

So better pickup sales are a good indication of long-term confidence in construction activity by those working in the construction trades and, for farmers, a belief that crop prices will remain higher for another few years.

Along with Ford, GM and Chrysler also have reported growing pickup sales.

Sales of Ford's F-Series pickups in December 2012 totaled 68,787, the best December since 2006 and the 17th consecutive year-on-year increase in monthly F-Series pickup sales. (The Ford F-150 has been the best-selling pickup in North America since 1976 and the best-selling vehicle in North America since 1981.)

Why Pickup Sales had Declined

Pickup truck sales had fallen off because the economy had been so poor since the start of the financial crisis in 2008 that tradesmen couldn't afford to replace them even with the average age of pickups approaching 11 years.

You aren't going to get much on a trade-in for an 11-year-old pickup that has been used by a tradesman every day. These trucks are going to be beat, no matter how well they are looked after by their owners.

And the workers buying new pickups have to believe the economy is going to be strong enough to allow them to make their loan payments every month for five or six years.

Agriculture workers also contributed to the boost in pickup sales.

Farmers are seeing rising gross incomes as a result of higher crop and livestock prices. To a large extent, this is due to last summer's severe drought in the Midwest but drought losses have been offset largely by crop insurance.

Net farm income is thought to have declined by 3.3% largely because of higher fuel and fertilizer prices.

In rural upstate New York, where I live, agriculture is dominated by small dairy farms and hay. Last year was a great year for hay with many farmers getting three or four cuttings over the summer compared with the average of one to two cuttings during most seasons. The drought in the Midwest has increased hay demand and prices outside our local market are rising.

Hay is a bulky, low value-added crop so it usually doesn't pay to ship it very far. But desperate farmers in drought-stricken areas have been paying up for hay and other fodder as stocks are being depleted earlier than usual this winter.

It is no coincidence that we are seeing a lot of new pickups being driven by happy hay farmers on the road this winter.

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  1. Doug | January 31, 2013

    I believe someone misinterpreted the rise in sales of pick-up trucks as an indicator of the economy. For an example, look over the inventory of pick-ups at your local Ford dealer. These trucks are decked out as well as any automobile, many more so. These arn't being purchased by tradesmen, they're being purchased by everyday folk who either appreciate the utility of a pick-up for everyday use, or want the masculine image that a pick-up carries. Maybe you only see pick-ups used by tradesmen in the big cities due to their size, but the rest of America drives pick-ups. Some may be getting older and need replaced, but I wouldn't jump to the conclusion that it's tradesmen buying new trucks due to this "booming new economy". Shortly, we'll need a pick-up truck to carry enough eroded dollars to the store for a loaf of bread and milk.

    • toolpusher | January 31, 2013

      Agree 100%. No way are the majority of drivers of pick-up trucks "craftsmen and farmers"

  2. Jeff Pluim | January 31, 2013

    I come from Alberta, Canada, where 30% of the GDP is oil revenue. With all of the shale oil development happening in the U.S., my experience says that it is the oil patch that is driving the sales of pick-up trucks, not general construction or farming.

  3. Doris Kelsey | January 31, 2013

    People need pickups top pull their homes. Child protective services will take your kids if you live in a tent. My niece just bought a camper so she and her husband and their three kids will have a place to stay when they lose their house. The seller of the camper said EVERYONE who had looked at it, was thinking of buying it for the same reason!

  4. rbgreene | January 31, 2013

    Another aspect. Back about 20 25 years ago when to increase gas millage cars were downsized I bought a new P.U. because I wanted a safe car for me and my family. I worked at a company where there were a lot of executives that did the same. With new downsizing I still, tho retired have a Ford P.U. with steel bumopers practically no plastic fenders or body parts. Even have what I call a cow catcher on the front. Gas milage is not the most important cost of driving. Safety is.

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