Manufacturing and Trade Inventory-to-Sales Ratio: Inventory Adjustment Over
This isn’t much of a surprise. The ISM reports have indicated decreasing inventory levels. This graph really captures exactly how much inventories changed (relative to sales) to boost Q4 and Q1 GDP.
Unfortunately, retail sales declined in May. There was some pretty impressive sales growth coinciding with that peak. That’s started to turn over.
Unsolicited Analysis reminded us that there was some rush to buy houses before the expiration of the housing credit. That may provide some temporary support to purchasing, as new homeowners buy “shiny new objects for their homes.” If we are seeing the results of the temporary support now, our prospects for growth in the second half are terrible. Contraction with the help of support is scary.
