Wholesale Zombie

by Jeffrey P. Snider
Alhambra Partners

Wholesale inventories have ground to a halt, but since wholesale sales have also the inventory imbalance only continues midway already through its second year. Excluding petroleum, the wholesale inventory to sales ratio surged upward starting in November 2014. By the middle of last year, inventory growth had slowed but that only locked the current imbalance into seeming perpetuity. For the third time this year in May, the ratio was above 1.44 and comparable only to the Great Recession. The highest achieved during the dot-com recession was 1.422 in June 2001 because inventory declined sharply as sales did.

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