3/9/16

Bad news for the economy


This chart shows the inventory/sales ratio for business wholesalers (click on the chart to enlarge it).

Inventories keep rising much faster than sales, which is the reason the ratio is soaring. The worrisome element is the imbalance between inventories and sales has reached levels last seen in 2008-2009 when the economy and the financial markets were facing a dire outlook.

The only way to bring the growth of inventories in line with that of sales is to cut production. There is no other way. This is the reason industrial output has been weak since December 2014.

Excess inventories is causing production, all commodities, and yields to decline. As the economy weakens, profits suffer.

Yes, the business cycle is alive and well in spite of the mumbo jumbo and hot air exhaled by those in charge of our economic affairs.

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Thank you for visiting this site.

George Dagnino, PhD
Editor, 
The Peter Dag Portfolio
Since 1977 
Author, Profiting in Bull and Bear Markets


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