The chart shows “real” inflation-adjusted inventories. The index year is 2012.
In four of the last six recession, inventories continued to build well into recession. In the other two, inventories peaked just prior to or at the start of recession.
Biggest Ramp in Wholesale Inventory History
Wholesale inventories are surging as retail inventories flatten. One way or another and perhaps both, there is huge problem somewhere.
A Big Trucking Red Flag
https://twitter.com/FreightAlley/status/1597427598090735616
Composite PMI
Manufacturing Has Peaked This Cycle
ISM data provides strong evidence that Manufacturing Has Peaked This Cycle
The only major component of the Manufacturing PMI® not in contraction is production. That will not last long given the collapse in domestic and export orders coupled with the backlog of orders in steep contraction.
Also note that the US Composite PMI Suggests the Economy is On the Verge of Recession
Add a huge inventory problem to this toxic mix.
Not to worry, Fed Chair Jerome Powell is still Preaching Soft Landing.
This post originated at MishTalk.Com.
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Mish
Cranky comrade! Someone steal your potato?
AD, money times velocity, is still too high in the 4th qtr. So, the target for N-gDp, and inflation, in the 4th qtr. is still too high.
Economists don’t understand money and Central banking. Milton Friedman, for instance, explains that “Fisher, in his original version, used T to refer to all transactions – purchases of final goods and services…, intermediate transactions…, and capital transactions (the purchase of a house or a share of stock).
In current usage, the item has come to be interpreted as referring to purchases of final goods and services only, and the notation has been changed accordingly, T being replaced by y, as corresponding to real income” (Friedman, 1990, p. 38).From Carol A. Ledenham’s Hoover Institution
archives: Friedman pontificated that:
Friedman: “I would make reserve requirements the same for time
and demand deposits”. Dec. 16, 1959.
Under monetarism, the monetary authorities use two tools to control the money supply — legal reserves and reserve ratios. If these tools are to be effective, all legal reserves of all money creating institutions have to be in a form which the monetary authorities can quickly ascertain and absolutely control. The only type of bank asset that fulfills this requirement is interbank demand deposits in the District Reserve banks owned by the member banks (like the ECB).
Similarly, the monetary authorities have to have complete discretion over changes in reserve ratios. This is essential since under fractional reserve banking (the essence of commercial banking) these ratios determine the minimum volume of legal reserves a bank must hold against a specific volume and type of deposit liability.