How the Inventory Pileup Boosted how to get rid of ants in my house naturally Q1 Blowout GDP and What Carmageddon Has to Do with It Wolf Street

The inventory pileup I have been discussing for a while how to get rid of ants in my house naturally played a big role in the surprisingly strong 3.2% GDP growth reported on friday, but it also played a big role in 2018. And it played a big role in 2014 and early how to get rid of ants in my house naturally 2015 before it got wound down, as inventory pileups always do, in a series of events that triggered the “transportation recession” of 2015 and 2016 (here is a taste from may 2016: “freight rail traffic plunges: haunting pictures of transportation recession: 292 union pacific engines idled in arizona desert”). As a consequence, the overall economy in 2016, still propped up by growth in services, grew at merely 1.6%, the stingiest growth since the great recession.

The bureau of economic analysis reported that private inventories in how to get rid of ants in my house naturally Q1 grew at an annual rate of $129 billion from Q4 last year, seasonally adjusted. “annual rate” means that if inventories keep growing at this rate, the total increase for the whole year would be $129 billion. But it wasn’t as big as Q1 and Q2 2015.

This increase in inventories in Q1 2019, adjusted for inflation, added +0.65 percentage points to GDP, according to the BEA. Without this increase in inventories – so with flat inventories from Q4 to Q1 – the 3.2% GDP growth would have been 2.55%.

In terms of actual increase in inventories, not an annual rate: inventories rose by $46.3 billion in Q1 from the prior quarter, seasonally adjusted. The chart below shows the quarter-to-quarter changes. The jump in Q1 2019 was just a tad larger how to get rid of ants in my house naturally than in Q1 2018 ($44.8 billion) and was smaller than in Q4 2017, Q4 2016, Q2 2014, and Q1 2014:

In terms of total private inventories, they hit a record of $2.83 trillion (seasonally adjusted) in Q1. At the business level, inventories are valued at cost, and the final sales amount of those $2.83 trillion in inventory will be a lot higher. In other words, there’s a lot of stuff in inventory.

The inventory level of $2.83 trillion was up 3.8% year-over-year, matching the year-over-year increase in Q4. But those two were the lowest year-over-year increases since Q2 2017. But when businesses whittle down their inventories by ordering less, it ripples through the economy, lowers GDP growth – and in 2015 and 2016 triggered the “transportation recession”:

On a quarter-to-quarter bases, in Q1 2019, inventories grew 1.7% from the prior quarter, same as in Q1 2018, but lower than the 2.4% jump in Q4 2017. This inventory pileup has been going on essentially for six how to get rid of ants in my house naturally quarters, over which inventories have ballooned by $210 billion, or by 8%.

Inventories at manufacturers rose 3.6% year-over-year in february to a record $692 billion (not seasonally adjusted), according to the latest data available from the commerce department. But from mid-2014 through december 2016, manufacturers had trimmed their inventories, hitting a low point of $615 billion in december 2016. This whittling down of inventories had contributed to the miserably how to get rid of ants in my house naturally slow growth of GDP in 2016 of 1.6% and to the “transportation recession.”

These inventories at retailers include $249 billion in inventories at new- and used-vehicle dealers and at auto-parts dealers, whose inventories inched up by $1.8 billion in february, and by $5.5 billion in january (the most recent data available), after having fallen in december by $7.3 billion. This data is not adjusted for price changes.

Based on consumer demand, automakers have been switching to more expensive pickups, suvs, and crossovers (“trucks”), whose sales have surged by 38% from 2014, and away from cars, whose sales have collapsed by 30% over the same period. Hence, the composition of those inventories at dealers has also changed how to get rid of ants in my house naturally in favor of those more expensive “trucks,” and the value in dollars of those inventories has risen how to get rid of ants in my house naturally in part because of this shift.

Since this shift from cars to “trucks” took off with a vengeance (a shift that I’ve long called “carmageddon”) in late 2014, the total value of auto inventories has surged by 42%! So a part of this increase in value of those how to get rid of ants in my house naturally inventories is structural and is unlikely to reverse.

Within this group, wholesale inventories of durable goods, in february at $415.6 billion, started surging in mid-2018 and reached double-digit year-over-year growth rates in december (+10.7%), january (+11.6%), and february (+10.6%). But february, on a month-to-month basis, already marked a slight down-tick from january, a first sign that businesses have started efforts to whittle how to get rid of ants in my house naturally down their inventories.

Now a similar pattern is forming as we had seen how to get rid of ants in my house naturally before and during the last transportation recession in 2015 and how to get rid of ants in my house naturally 2016: durable goods inventories have been piling up at wholesalers since how to get rid of ants in my house naturally late 2017, while shipment volume of goods, as tracked by the cass freight index, after a historic boom in 2018, have now declined four months in a row.

On the retail side, there is some seasonality in auto inventories, but this data is also seasonally adjusted. Overall, the structural shift to more expensive new-vehicle types (“trucks”) will continue to do its magic until that shift has how to get rid of ants in my house naturally run it course. Given some quarter-to-quarter seasonal fluctuations, I expect the value of vehicle inventories to rise overall how to get rid of ants in my house naturally in 2019 and act as a boost to GDP.

But the likely process of whittling down inventories at wholesalers how to get rid of ants in my house naturally and manufacturers will act as a drag on GDP, with the first signs cropping up perhaps as early as how to get rid of ants in my house naturally the second quarter and spreading into next year. How much of a drag will depend on how rapidly how to get rid of ants in my house naturally inventories are being whittled down. For now, the signs do not point at a massive panic-style culling of inventories, but rather a careful and slow process that does not how to get rid of ants in my house naturally impact GDP in a dramatic fashion.

To be brief, I would refer you to it’s worse than you think by keith quincy. Separate out the financial economy from the real economy and how to get rid of ants in my house naturally a clever person can use it to generate statistical series how to get rid of ants in my house naturally indicating that the real US economy really has not recovered how to get rid of ants in my house naturally since 2000.

The statistics I use represent the results of proprietary research how to get rid of ants in my house naturally and I’m in no position to present them here, and I’m constrained from presenting them elsewhere besides, at least for the time being. If you are determined, try googling up “economic indicators for the poor and middle class”, and be prepared to make an ongoing hobby out of how to get rid of ants in my house naturally chasing down all the leads: statistics related to employment, costs, debt, and opportunity for those who are not well-off, and make normative valuations in addition to financial ones. They really are out there, and there are a lot of them. Then, just figure out how to put them together to form how to get rid of ants in my house naturally a picture, one that is more accurate than the official one. The economic policy institute and the organisation for economic co-operation and development could be good places to start.

Let us cut to the chase. If your circumstances are unsatisfactory, or those of your family, friends, neighbors, and acquaintances, then it does not matter what the official statistics say, as those can be good, bad, intentionally or accidentally misleading, and politically motivated, and do not refer to you specifically in any case. Economics and finance can be very subjective things, and rightfully so.

Well said, equities are no longer tied to the real economy. This appears to be the result of the investor class how to get rid of ants in my house naturally gaining access to huge sums of ultra-cheap money, facilitated by the fed, using this money to buy up hard assets and paying how to get rid of ants in my house naturally back the easy money with inflated dollars worth only a how to get rid of ants in my house naturally fraction of what they borrowed. If this process is repeated often enough the investor class how to get rid of ants in my house naturally eventually owns everything and that includes real estate and stocks how to get rid of ants in my house naturally that pay them dividends and grow with inflation and are how to get rid of ants in my house naturally protected by a free put from the fed.

What I find interesting is the fed obviously knows the how to get rid of ants in my house naturally above statement to be true yet they continue the process, unafraid of the victims rising up. The fed seem aware that wage earners have no agency how to get rid of ants in my house naturally and pose no threat so they simply don’t care if they get pissed – there are no pitch forks or torches to fear.

One could go a step further and suggest robots and how to get rid of ants in my house naturally AI can handle most of the tasks performed by wage how to get rid of ants in my house naturally earners of the past and as such the investor class how to get rid of ants in my house naturally is probably looking at various solutions to bring about a how to get rid of ants in my house naturally die-off of these “eaters”. What if you could feed this mass of redundant humans how to get rid of ants in my house naturally adulterated, industrial foods that give them metabolic diseases. What if you could get them to willingly purchase questionable how to get rid of ants in my house naturally pharmaceuticals that may even cause them to commit suicide (anyone want some abilify – they seem to think you need it), what if they can use the incompetent, overpriced medical industry to bankrupt them and further damage their how to get rid of ants in my house naturally health with unnecessary procedures. I’m not saying the investor class is trying to kill how to get rid of ants in my house naturally you off but I would suggest that if someone was how to get rid of ants in my house naturally looking for a way to rid society of the surplus how to get rid of ants in my house naturally population these might be worthwhile efforts.

All through these astonishing monetary shenanigans the fed has lied how to get rid of ants in my house naturally to us. First bernanke said QE was a temporary and finite emergency how to get rid of ants in my house naturally measure, then he gave us QE2, twist and QE3 with a chaser of permanent low interest how to get rid of ants in my house naturally rates – he lied about his intentions all the way to keep how to get rid of ants in my house naturally ordinary citizens afraid of buying assets. Janet repeated the process (although one could argue she was just a well meaning how to get rid of ants in my house naturally idiot) and now powell, just one more liar, chased mom and pop out of the stock market and how to get rid of ants in my house naturally then reversed course and jammed markets higher into a rally how to get rid of ants in my house naturally seldom witnessed in history. Either the fed is totally incompetent or we have been how to get rid of ants in my house naturally jobbed.

Look into turkey,india,argentina,china,US liquidity and spreads… when liquidity evaporates, institutions sell. When institutions sell, it’s game over… 90 % + of equities trading is passive or algo, the means the trend is always heavily biased in either how to get rid of ants in my house naturally direction, when markets go up they go up like stairs, but on the way down in this trading environment, it’s an elevator. Extremely fast and vicious, especially when there are no buyers. When market makers houdini, it’s freefall like in end 08. Dow lost 10 % of value in 8 trading days in december 2018, no defaults nothing happened, just liquidity tightening

End 08 will happen again, same liquidity issues already flashing red, scary part this time is EM central banks have been how to get rid of ants in my house naturally fighting liquidity issues since 2018 and they can’t stop it, it’s always little temp boost that fade just as quick how to get rid of ants in my house naturally cause of too much debt servicing, liquidity soaks up instantly… every major central bank has been injecting massive stimulus in how to get rid of ants in my house naturally there economies for years, and they can’t fight it anymore… central banks can’t even stop what is coming, that’s when you know the end of credit cycle is how to get rid of ants in my house naturally here

Now the fed is a different beast, and they will step in once markets are down 30-40 %, given the speed of sell-off, it will be a meltdown… american markets will be fine once rates at 0 and how to get rid of ants in my house naturally helicopter money is in, cause US banking system is healthy somewhat. The pension funds and japan are gonna get it cause how to get rid of ants in my house naturally of the corporate CLO debacle, and the rest of the world… deep recession

The primary driver of deleveraging won’t be around to import inflation and export deflation ( china )… it’s weird to see people thinking CB’s can fix anything at any time. If they cancel all consumer debt, then yes we are going to the moon, but with amount of debt servicing going forward, wtf will earnings look like ? Quite a few corporations will struggle with debt load going how to get rid of ants in my house naturally forward, and a number of consumers are taped out. Real inflation is far outpacing wage growth

What I said today, including in the conclusion, inventories are unlikely to do anything drastic: “for now, the signs do not point at a massive panic-style culling of inventories, but rather a careful and slow process that does not how to get rid of ants in my house naturally impact GDP in a dramatic fashion.”

Wholesale and manufacturing inventories will likely flatten out or decline, but slowly and spread over several quarters, and it won’t make a huge quarter-to-quarter dent, which is what GDP measures. So there will be a drag on GDP from that how to get rid of ants in my house naturally corner, but it won’t be huge.

Also remember, there is another complexity that I didn’t discuss: when inventories decline because items get sold faster, those sales add to GDP when they become “consumption.” so stronger sales by wholesalers and manufacturers when they eventually how to get rid of ants in my house naturally translate into consumption would boost GDP even though their declining how to get rid of ants in my house naturally inventories of those items would be a drag on GDP how to get rid of ants in my house naturally from the other side. In other words, lowering inventories by increased sales on net adds to GDP. It’s a plus-minus situation. It’s when sales stay flat (the “plus” is missing, and orders in the supply chain fall to reduce inventories how to get rid of ants in my house naturally that GDP feels the heat because the “plus” is missing.

For example, on the retail side, if suddenly auto sales surge in Q3 and Q4, and this unexpected surge draws down inventories at dealers, the decline in inventories would be a drag on GDP how to get rid of ants in my house naturally but the surge in sales would be a larger boost. So on net, such a sales surge that lowers inventories would still add how to get rid of ants in my house naturally to GDP.

I did note in my prior article that I expect how to get rid of ants in my house naturally that Q1 GDP growth of 3.2% will be revised lower in the second estimate. I said this in part because I expect that the how to get rid of ants in my house naturally inventory boost will be revised lower. The “advance” estimate of GDP that we got on friday still doesn’t include the march inventory data. They used a rough estimate to fill that gap. The second estimate will include that data. And my guess is that wholesale inventories will have ticked how to get rid of ants in my house naturally down some in march. But I don’t think that the inventory revisions are going to huge.

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