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 December 25, 2022

Report: 'Holiday indicator' suggests that a recession is coming in 2023

The Wall Street Journal just published a report suggesting that a decrease in the sale of car bows could be a sign of bad news for the U.S. economy. 

The article is titled:

Who’s Getting a Car for Christmas? Ask the People Who Sell Giant Bows: Americans do give cars as holiday gifts, and a decorative touch popularized by Lexus commercials may now be an economic indicator of sorts.

The Journal reports, "some makers and sellers of car bows, the oversize decorations that sit on hoods and roofs, report a steep decline in business this holiday season."

The practice of placing these oversized bows on cars has been going on for at least 20 years now, ever since Lexus placed such a bow on a car back during its first December to Remember sales event.

"As with many economic indicators of late, the data is mixed," the Journal continues. "But if weak bow sales are taken as a shiny red indicator, they may foreshadow a drop-off in the number of cars given as gifts this year."

The Journal goes on to cite some specific data.

"Orders are down 35% this holiday season at King Size Bows, which sells thousands of car bows each year to dealerships and individual consumers," the Journal reports. "That works out to hundreds fewer bows than normal, says Amber Hughes, the Costa Mesa, Calif., company’s owner."

The Journal then cites other examples from Warminster, Pennsylvania, and Whippany, New Jersey.

The basic point that the Journal is trying to make here is that fewer bow sales may mean fewer car sales, and that this may be yet another indicator of an ongoing or imminent recession  - or what the Journal called a "bow-cession."

To put it differently, consumers aren't buying cars because they don't have the financial confidence to buy cars, and they don't have the financial confidence to buy cars because of a fear of a recession.

The Journal admits that this connection - between car bow sales, car sales, and a recession - may not be the most air-tight argument. The Journal even points to bow sellers who are making above-average sales.

There are some things, though, that support the Journal's article.

For one, car sales are expected to decrease significantly in 2022 from 2021, by at least one million, according to estimates. And, for another, purchases of a leased car are also expected to be up significantly. Experts are predicting that these trends will continue into 2023 as well.

Whether this all points to a recession, however, is debatable. Less debatable, though, is the idea that a recession is imminent. Experts do seem to be in agreement about that.

Written By:
Robert Ayers

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