The stock market, represented by the S&P 500, continues to rise, but this growth does not reflect a healthy economy. A deeper examination reveals serious underlying weaknesses.
In previous decades, the stock market was seen as a forward-looking entity where investors made decisions based on expectations of future earnings. However, those days are long gone.
Today, the stock market has devolved into a speculative arena. Thousands of workers routinely invest in index funds through company-sponsored retirement plans, displaying a blind faith in the process. Others, captivated by the allure of AI advancements, believe we are witnessing the dawn of a monumental economic resurgence. Many rush to seize whatever opportunities they can find, often lacking a clear understanding of reality.
As a result, share prices and index levels offer little insight into the true state of the economy. The warning signs that once resonated on Wall Street are now absent. To grasp what is really unfolding, we must look beyond traditional financial metrics.
A prime example is the drastic decline in U.S. heavy truck sales, a critical barometer of economic health. This is no mere dip; the situation is alarming.
In August, sales of heavy trucks—specifically Class 8 rigs—plummeted by an astonishing 20,000 units, bringing the annualized rate to just 422,000. This marks the lowest level since January 2022. Moreover, a three-month moving average has also decreased to 438,000, a stark reminder of the economic challenges faced during the 2020 lockdowns.
National Slowdown
This decline in truck sales extends beyond the manufacturers; it signifies broader issues for the economy at large. Heavy truck sales are among the most reliable indicators of economic health available.
Who invests in a brand-new Class 8 truck worth over $150,000? Typically, it’s companies needing to transport large volumes of goods—manufacturers, construction firms, and retailers. Such purchases are not made on a whim; they represent significant capital investments grounded in a company’s optimism about future economic conditions.
The decision to buy heavy trucks reflects tangible happenings in the world, not the fabricated narratives of Wall Street.
When a CEO authorizes a new fleet of trucks, it signals an expectation of robust demand for products over the next five to seven years, necessitating an increase in logistical capabilities. This represents a belief in future economic expansion.
Conversely, a drop in heavy truck sales indicates underutilized trucking fleets. This suggests a slowdown in freight demand and a weakening outlook for both manufacturing and construction. When that happens, CEOs often pause significant investments due to anticipated reductions in the movement, production, and sale of goods.
Heavy trucks are vital for moving raw materials to factories and delivering finished goods to retailers. Historically, a steep decline in truck sales has heralded nearly every major recession. When the machinery of commerce begins to falter, as indicated by sinking trucking activity, an economic slowdown is nearly inevitable.
However, heavy truck sales are not the only indicator of economic troubles on the horizon.
Front-Line Warning
This week, the Institute for Supply Management (ISM) published its latest Purchasing Managers’ Index (PMI). This index functions as a monthly report card for the U.S. economy, assessing the vitality of the manufacturing and services sectors.
The PMI is derived from a survey of procurement and supply chain professionals who make purchasing decisions for companies. They are positioned at the forefront of business activity and have an up-close view of current circumstances.
Each month, the ISM surveys these purchasing managers with straightforward questions: Did your new orders increase, decrease, or remain unchanged? What about production, employment, and inventory levels?
The PMI is calculated by aggregating the responses into a single number ranging from 0 to 100. A reading above 50 indicates expansion, while a reading below signifies contraction. The lower the figure falls, the more severe the shrinkage.
The manufacturing PMI has been in contraction territory for several months now, with a reading of 49.1 in September. This aligns closely with the downturn in truck sales, reflecting a contraction in manufacturing output and a subsequent reduction in freight requirements.
The PMI serves as a leading economic indicator; companies do not wait for an official recession declaration before curtailing their purchasing. Purchasing managers tend to signal a slowdown long before it is evident in larger governmental reports such as GDP or unemployment statistics.
When these managers begin to cut orders, slow production, and scale back hiring, it serves as a clear warning of impending economic troubles.
Keep Your Eyes on the Road
Household and business debts have reached record highs: $20.5 trillion and $21.9 trillion, respectively. A decade ago, these figures were $14 trillion and $13.2 trillion.
As of Q2 2025, credit cards accounted for $1.21 trillion, auto loans reached $1.66 trillion, and student loan balances stood at $1.64 trillion.
The U.S. economy still grapples with the significant debt amassed due to the Federal Reserve’s policies during the government-enforced lockdowns of 2020-21. For years, low-interest rates coupled with an expanded money supply allowed both businesses and consumers to accrue substantial debt.
As economic activity decelerates, debts accumulate. When this debt turns problematic, it leads to bankruptcies among individuals and businesses, prompting lenders to incur losses—a hallmark of recessionary environments.
The nosedive in heavy truck sales serves as an early warning of an impending liquidation phase. The surplus of trucks in inventory and declining new orders highlight the overexpansion experienced in logistics and manufacturing during the era of cheap money.
Businesses once believed they required such capacity to meet artificially inflated demand. Now, as that demand recedes, they recognize their invested capital in underutilized trucks as a liability that must be addressed.
The slump in trucking activities will not be the cause of a recession, but it is a telling sign that the economic boom is transitioning into a bust. Furthermore, a cycle of interest rate cuts by the Fed will not avert this downturn but will likely only exacerbate distortions within the economy.
Currently, stock market investors are assuming considerable risks, driving valuations to unprecedented heights, even as the broader economy weakens.
Hence, disregard the fervor on Wall Street. The reality lies on the highways and within factories. When trucking operations cease and purchasing managers apply the brakes, that is your clearest signal. The inflated stock market may be betting on a boom, but the tangible economy is quietly foretelling a bust.
Keep your eyes on the road.
[Editor’s note: Join the Economic Prism mailing list to receive a complimentary report titled, “Utility Payment Wealth – Profit from Henry Ford’s Dream City Business Model.” For a special trial offer on MN Gordon’s Wealth Prism Letter, you can find it here.]
Sincerely,
MN Gordon
for Economic Prism
