"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 1 hour The Calm Before The Storm In Tech Stocks
  • 3 hours Japan Scrambles To Dodge Trump’s Trade War
  • 18 hours Big Banks Double Down On Crypto Ambitions
  • 19 hours Investor Debt Outpaces S&P 500 Growth
  • 20 hours Will Bitcoin Ever Dethrone Gold?
  • 21 hours China's Orwellian Social Media Machine
  • 22 hours What Sparked Russia’s Gold Buying Spree?
  • 1 day The War For "White Petroleum"
  • 1 day Stock Market Bulls Are Running Out Of Steam
  • 1 day Crypto Stocks Poised To Bounce Back
  • 2 days The Five Biggest Bubbles In Stock Market History
  • 2 days Was Finland’s Universal Basic Income Program A Failure?
  • 2 days China Goes Long On Gold
  • 2 days Is It Wise To Trade The Trump Effect?
  • 2 days The Tech That Telecom Giants Fear Most
  • 2 days China’s EV Industry Is Booming
  • 2 days How Will Gold React As North Korean Tensions Cool?
  • 2 days Is This The Biggest Mining Opportunity Of 2018?
  • 3 days China’s $33 Trillion Finance Industry Opens To Foreign Investment
  • 3 days Is Bitcoin Cash Overbought?
Stock Market Bulls Are Running Out Of Steam

Stock Market Bulls Are Running Out Of Steam

Despite a recent correction in…

The FANG Stock Investors Should Avoid

The FANG Stock Investors Should Avoid

Thanks to a private data…

Wholesale Trade: Sales Down, Inventories Up; GDP Estimate Revised Lower Again; Sticking With Recession Call

The US Commerce Department Monthly Wholesales Report for January 2015 shows sales are down while inventories continue to rise.


Wholesale Trade Sales

  • Sales down 3.1% from the revised December level
  • Sales for December revised lower by 0.5%
  • Sales down 1.0% from January 2014
  • Sales of electrical and electronic goods were down 4.4% from December
  • Sales of metals and minerals, except petroleum were down 4.1% from December
  • Sales of nondurable goods were down 4.6% from December
  • Sales of nondurable goods were down 6.7% from last January.
  • Sales of petroleum and petroleum products were down 13.5% from December
  • Sales of drugs and druggists' sundries were down 3.6% from December


Wholesale Trade Inventories

  • Inventories up 0.3% from the revised December level
  • Inventories up 6.2% from January 2014 level
  • Inventories for December revised downward by 0.1%
  • January inventories of durable goods were up 0.6%
  • January inventories of durable goods were up 7.7% from a year ago
  • Inventories of electrical and electronic goods were up 2.4% from December
  • Inventories of motor vehicle and motor vehicle parts and supplies were up 1.6% from December
  • Inventories of nondurable goods were down 0.1% from December
  • Inventories of nondurable goods were up 3.7% from last January
  • Inventories of farm product raw materials were down 4.6% from December
  • Inventories of paper and paper products were up 3.0% from December


Inventory to Sales Ratio

Inventory to Sales Ratio


Seasonally Adjusted Sales

Seasonally Adjusted Sales


Seasonally Adjusted Sales Percent Change From Year Ago

Seasonally Adjusted Sales Percent Change From Year Ago


Diving Into the GDP Report

On January 31, I went Diving Into the GDP Report and noticed some ominous trends.

Growth in fixed investment is falling rapidly. Equipment, industrial equipment, and transportation equipment are already in contraction.

Inventories added 0.82 percentage points to fourth quarter GDP. Over time, this series trends to zero, so expect a pull back next quarter.

Rising imports subtract from GDP. Imports actually took 1.39 percentage points from GDP. If oil prices head back up, even modestly, this number could get worse.

Exports added 0.37 percentage points to fourth quarter GDP. But note the trend.

Because of the rising US dollar, export growth is dwindling. Will exports add or subtract to GDP next quarter?

All things considered, this GDP report is far more than a simple snapback from the rapid expansion last quarter.

Canada in Recession, US Will Follow in 2015

Earlier today in Canada in Recession, US Will Follow in 2015, I stated "A Canadian recession is underway. US will follow."

Decoupling or Not?

I remain amused by all the pundits who think the US has "decoupled" from the global economy and will grow stronger in 2015.

Let's return to a question I asked above: Will exports add or subtract to GDP next quarter?

I suggest the answer is subtract. Not only are US exports getting more expensive relative to Europe and Japan, the entire rest of the global economy is slowing rapidly. Our biggest trading partner is Canada and Canada is in recession, with a rapidly sinking loonie (Canadian dollar) on top of it.

US Recession

The US won't decouple, just as China did not decouple from the global economy in 2008-2009 (a widely-held thesis I also knocked at the time).

Indeed, now that virtually no economist expects a US recession, I believe we are finally on the cusp of one, just as the Fed seems committed to hike.


GDP Revised Lower Again Today

I have been calling for lower and lower GDP estimates all year. And here we go again with the latest GDP Now Projection from the Atlanta Fed.

2015 GDP Forecast


Recession Call

On March 5, I reported Factory Orders Unexpectedly Decline 6th Month.

The adjusted Fed GDP forecast is rapidly approaching the stall point of 1%. It does take into consideration today's trade numbers.

But the US dollar continues its upward climb and much of the world is still slowing including our biggest trade partner, Canada.

In the history of the wholesale trade series dating back to 1993 (first three charts above), the only time sales have gone negative year-over-year was when the economy was in recession.

I am sticking with my recession call.

 

Back to homepage

Leave a comment

Leave a comment