Thursday, April 06, 2017

Inventories as Indicators

Economic Scene; Inventory Pileups And Recessions


NEARLY every economist attempting a forecast these days ends on a foreboding note.
The economy is very robust, they say, and although some of this vigor will soon disappear, the resulting slowdown will be mild. But then comes a worrisome postscript: Maybe the slowdown will not be so mild, after all. As Roger E. Brinner of Data Resources Inc. put it this week: ''A classic recession, beginning in 12 to 18 months, remains a serious risk.''
If a recession were to develop, the first sign of it would probably show up in rising business inventories - a pileup that would go unnoticed for a while. Before almost every recession since World War II, unsold merchandise has accumulated in company warehouses. Inventories, in fact, are rising now, and they might be reaching excessive levels, according to Walter Joelson, chief economist at the General Electric Company.
Many other economists disagree. But no one really knows. Excessive inventories are hard to spot until well after the fact. This is partly because the Commerce Department gathers monthly inventory statistics late. The June numbers, for example, will be announced this Friday - six weeks after June ended - and the August numbers will not come out until mid-October. 

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Note that I blocked the date of this NY Times article.  First lets see if this is on the right track.

 











FRED RETAILIRSA:

Looks to me like inventories are only good for predicting the ends of recessions.  The article was from Aug 8, 1988. 
Morning dew on a trap spider web. 

21 comments:

Mike said...

interesting charts..off the top of my head:

1) looks like the focus on holding lower overall inventory levels has been successful over time (JIT supply chains, etc)

2) it appears businesses build inventories in anticipation of improving business conditions (e.g. 2012-2015)..

3) then the recession happens..sales plummet..they get caught with excess inventory..and the correction happens

rinse..repeat

good stuff!!

Rob Dawg said...

Many of the same things I saw. The audience here is smart enough that I have to remember to save the good stuff for them in the comments.

The JIT revolution is obvious in the long trends.

Cinco-X said...

What's going on in mudville?

Elizabeth Merceret said...

Lovely dew picture. I have a new turtle a preteen turtle only 3 inches long. I don't think it knows where it's burrow is. Well, if another 300k people start working they will buy more stuff, right?

Mike said...

speaking of inventories..I see the US crude oil inventories hit a record high last month (peak oil!!)

Gas prices don't seem to be coming down though..still $2.60 ish per gallon around here for the cheapest..(we may have just had a sales tax hike though)..

Rob Dawg said...

Here's your "mudville":
ComradeKristina
BREAKING: Senate Majority Leader Mitch McConnell moves to change Senate rules to ensure confirmation of Trump’s Supreme Court pick.— AP Politics (@AP_Politics) April 6, 2017

Giving_Cat
That’s an interesting way to phrase the reassertion of the Harry Reid rule. The rules change doesn’t ensure confirmation. It only moves the confirmation to a vote. The problem with long knives is the lack of precision.

sumluk
… so you’re back to the same old twist of the facts, eh? … some things don’t change.

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Can you believe it?

Rob Dawg said...

Don Rickles, 90. A loss.

LBD said...

Cars sales peaking, lease and rental returns, the pipeline has to be starting to clog soon. CRE, Brick and Mortar BK's. Cracks starting everywhere.

Mike said...

was flipping around the channels the other night and came across one of those Hollywood "roasts" with Rickles...the guy was so funny.

I think they were roasting Dean Martin..so after hitting him with about 10 jokes/insults..he wraps up by saying..

"anyways..the only reason I'm here tonight is in case you get hot again"

rip Don...

Cinco-X said...

Anyone need a use 5MB hard drive: http://webtudo.net/wp-content/uploads/2016/11/RAMAC-3053.jpg

Rob Dawg said...

What would anyone need with FIVE megabytes?

Cinco-X said...

Of course I can... What a bunch of yahoo's, both the dims in the Senate and the TDS addled clowns in mudville

Cinco-X said...

Damn... Didn't know he was still around. Of course, it's the cranky ones that live there longest

Cinco-X said...

Check the link...

Mike said...

McConnell nailed it..Dims want two sets of rules..one for when their party nominates a judge..and another for when the R's do...

Rob Dawg said...

Check the link

You read my comment inside out. I meant back in those days the question was how in the world would anyone manage to fill up an entire 5Mb?

Elizabeth Merceret said...

Help

Elizabeth Merceret said...

Well, I can post again. For a while it wanted something about my url

Elizabeth Merceret said...

You Kali types feel any earthquakes?

Rob Dawg said...

No indication of access problems at this end Liz.

There was just a 3.2 at Ferndale. That's maybe Charlotte, NC to Merritt Island.

Cinco-X said...

Lol