Tuesday, 14 April 2015

U.S. Recession Alert: Inventory to Sales Ratio Increases Faster than September 2008

This should not go unnoticed: the inventory to sales ratio for U.S. business came in at 1.36 for February. This was unchanged from January. Ignoring last month and the intermediate aftermath of banking crisis, this was the highest ratio reported since October 2008. 

Perhaps more importantly, the ratio expanded 4.6% in February on a y/y basis which was even higher than the 3.1% expansion in September 2008. 

As a range of other indicators also suggest the U.S. economy is in a very bad place (e.g. here and here) and much worse than in 2008, the surge in the ratio above is yet another warning sign that a recession as defined by the establishment is lurking.