Retail sales stumbled in December, contributing in part to the inventory boom in the US supply chain, but not entirely. Inventories would skyrocket even though sales had been better. In fact, retail inventories rose at a record pace beyond anything seen before, had sales been significantly improved, the monthly inventory increase would still have been unlike anything in the data series. .
And now those stocks have been revised higher.
While that’s the case, the most concerning finding from the Census Bureau’s advanced estimates for January 2022 is how retail inventories have grown even further. Although retail sales have rebounded considerably from the decline in December, this latest (seasonally adjusted) monthly increase was the second highest on record anyway (just ahead of December 2018).
The companies said they intentionally over-ordered just to make sure a certain amount of goods made it through all the different transportation bottlenecks. They absolutely get it now.
The only bright spot may have been wholesale inventories, and I write “may” only because the January 2022 monthly increase was simply “normal” in the pre-2020 sense. The change in total wholesale inventory (in value) over December was “just” 0.83% rather than the records set in those parts two of the previous three months before January.
Anyway, inventory, even at the wholesale level, is now accumulating much faster/higher than sales (note: advance estimates for January do not include component categories or sales; only last month’s estimates for all wholesale inventory were included for January, everything else through December 2021).
And where does all this inventory come from? It was introduced into the import circuit, which made the transport and logistics situation much worse than it already was. It’s no wonder that consumer prices accelerated in the last three months of last year despite even larger inventory builds.
So many previously ordered goods have been shipped and even delivered. It didn’t stop in January; on the contrary, the seasonally adjusted number for goods (which even approximates price changes) jumped in the last quarter to 2021 (“economy” of fourth quarter GDP). According to the census estimate, the total value of goods imported after September up to and including January jumped 9.9% (gross change, not per year).
However, mostly in those same months, US exports went the other way. They are up slightly in January (values) compared to September, but down compared to last October.
This represents another economic account that suggests that the global economy – aside from dual-order, slow-moving US goods – may have cooled to a not insignificant degree since this particular month.
Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.