Monday, September 21, 2015

Business Sales & Inventory

Lag before the economic swan dive.

As you can see in the previous post, initial claims are an early birdie warning.  When they suddenly shoot up you can see a gray bar of a recession follows.  The gray bar is only added well after the recession actually started.  We only get to see the initial claims shoot up.

 What happens is that corporations liquidate inventory in a panic mode.  Since they don’t need any more inventory they make layoffs in a cost cutting mode.
 So inventories are important to watch too.  All these things are reported with a lag so you can only see that inventories are too high.  The initial claims are an early warning of an imminent nature.  They are reported weekly.

 Here are Business Sales, inventory levels, and inventory to sales ratio for the month of July, the most recent data.

ABOVE: It looks like there should be a gray bar by now.  This is year over year.

ABOVE: this has definitely been trending the wrong way

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