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Wholesale Inventories Spike Most In 2 Years As "Hollow Growth" Continues

Tyler Durden's picture


We can only imagine the upward revisions to GDP that will occur due to the largest mal-investment-driven wholesale inventory build in over 2 years. The 1.4% MoM gain is over 4x the expectation and biggest beat since Q4 2011, when - just as now - a mid-year plunge was met by a rabid over-stocking only to see the crumble back into mid 2012. As we noted previously, 56% of economic "growth" this year was inventory accumulation (cough auto channel stuffing cough) and this print merely confirms "hollow growth" continues.




As we noted previously,

So how does inventory hoarding - that most hollow of "growth" components as it relies on future purchases by a consumer who has increasingly less purchasing power - look like historically? The chart below shows the quarterly change in the revised GDP series broken down by Inventory (yellow) and all other non-Inventory components comprising GDP (blue).

But where the scramble to accumulate inventory in hopes that it will be sold, profitably, sooner or later to buyers either domestic or foreign, is seen most vividly, is in the data from the past 4 quarters, or the trailing year starting in Q3 2012 and ending with the just released revised Q3 2013 number. The result is that of the $534 billion rise in nominal GDP in the past year, a whopping 56% of this is due to nothing else but inventory hoarding.


The problem with inventory hoarding, however, is that at some point it will have to be "unhoarded." Which is why expect many downward revisions to future GDP as this inventory overhang has to be destocked.

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Tue, 12/10/2013 - 11:19 | 4232453 Bearwagon
Bearwagon's picture

Quick! Aid the economy ... burn down a block!

Tue, 12/10/2013 - 11:29 | 4232496 Cult_of_Reason
Cult_of_Reason's picture

Shut up! The economy is improving and the improvement is sustainable, otherwise the Fed would not talk about tapering.

Put your money to work, buy the dip!


Tue, 12/10/2013 - 11:36 | 4232523 Headbanger
Headbanger's picture

Great!  I should be able to buy a nice new full size pickup for well under $20,000 in a few months!

Tue, 12/10/2013 - 11:42 | 4232547 Cult_of_Reason
Cult_of_Reason's picture

Put your money to work, watch CNBC, and buy the dip! Any dip in prices will eventually rise back up, stock prices are guaranteed by the Fed to rise and only to rise. It's unpatriotic to think the stock market is a bubble. Lever up with maximum margin possible and buy the dip!


Tue, 12/10/2013 - 12:19 | 4232663 sbenard
sbenard's picture

No! BOOBwah!

As in "booboisie"!

Tue, 12/10/2013 - 12:37 | 4232720 CheapBastard
CheapBastard's picture

You can barely walk thru any store ...the aisles are so packed with overflowing tables of clothes. Summer stuff, winter stuff, Spring stuff, Christmas stuff, Thanksgiving leftovers...and so on.

The appliance aisles have things stacked 2 or 3 high.....the flood of crap stuffing stores is almost uncredible!


[or is that, "unpossible'?]

Tue, 12/10/2013 - 13:54 | 4233042 PT
PT's picture

So we can afford to build stuff but no-one can afford to buy it.  Gee, how does that happen?

Later on, the excess stuff will be destroyed - people will actually be paid to destroy brand new stuff that works - so as not to dampen "future demand" ... which was never going to appear in the future anyway because no-one will have enough money to buy anything in the future either.

Fuck everything!  Look at the world for what it is, not what some idealist thinks it should be.  You're expected to "save the environment" so companies should not be allowed to waste resources building and destroying stuff.  You could afford to build it, therefore someone can afford to have it.  Everything else is bullshit. 

Tue, 12/10/2013 - 17:34 | 4233828 Bobbyrib
Bobbyrib's picture

"So we can afford to build stuff but no-one can afford to buy it.  Gee, how does that happen?"

It's called the financialization of the US economy.

Tue, 12/10/2013 - 11:20 | 4232457 Occident Mortal
Occident Mortal's picture

Oh dear, the build up of inventory each quarter does look even larger than it was prior to 2008.

Tue, 12/10/2013 - 11:19 | 4232458 Carpenter1
Carpenter1's picture

These companies hire market analysts, who somehow figure in spite of all the evidence, that shoppers will buy like fiends this year. Delusional doesn't even come close.

Tue, 12/10/2013 - 11:22 | 4232473 Smegley Wanxalot
Smegley Wanxalot's picture

Oh sure, as if you don't have any pent up demand for a new SlapChop.

Tue, 12/10/2013 - 11:28 | 4232499 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

I thought this was going to be about Mongol Hordes channel stuffing a Kardashian.

Tue, 12/10/2013 - 11:19 | 4232459 Smegley Wanxalot
Smegley Wanxalot's picture

Sweet.  This means there will be badass after christmas deals on shit I dont need.

Tue, 12/10/2013 - 11:21 | 4232460 White Owl
White Owl's picture

Is it properly spelled hoarding or whoreding?

Tue, 12/10/2013 - 11:21 | 4232471 Pareto
Pareto's picture

"If you like your inventory......you can keep your inventory."

Tue, 12/10/2013 - 17:37 | 4233837 Bobbyrib
Bobbyrib's picture

As I like to say: "If your inventory is cheap Chinese junk and you like your inventory, you can shove it up ass."

Tue, 12/10/2013 - 11:24 | 4232482 buzzsaw99
buzzsaw99's picture

the fed will buy that chit eventually

Tue, 12/10/2013 - 11:30 | 4232505 BandGap
BandGap's picture

I was thinking the same thing, especially the autos. But realistically there is only so much they can do. I think there is a shitload of electronics to be disgorged at this point.


Tue, 12/10/2013 - 11:38 | 4232518 buzzsaw99
buzzsaw99's picture

ally bank makes ghetto bling bling auto loans to deadbeats --> loans go bad --> fed buys them --> jpm & the squid buy them at fire sale prices --> sells them to norway teacher's pension fund at face vale.


Problem solved.

Tue, 12/10/2013 - 11:44 | 4232553 BandGap
BandGap's picture

I don't think they'll get away with that one again. Substituting cars for houses in the same bullshit scheme isn't exactly camoflage.

Tue, 12/10/2013 - 11:59 | 4232607 conspicio
conspicio's picture


Supply exceeds demand for the foreseeable future - I smell a redux of cash for clunkers coming to a GM dealership near you??

Hey Tylers - whatever happened to that Class Action channel stuffing suit you covered a few years ago? That'd be a great follow up seeing as to how this practice has been going on quite some time with little or no outcome(s) other than that intern who became CEO at GM and a $10B+ loss for the taxpayers.

Tue, 12/10/2013 - 12:30 | 4232706 markar
markar's picture

Bingo. Car loans go negative within 3 years.

Tue, 12/10/2013 - 11:28 | 4232492 Dr. Engali
Dr. Engali's picture

Memo to all retailers.....Nobody has any fucking money!


That is all.

Tue, 12/10/2013 - 11:32 | 4232511 BandGap
BandGap's picture

They should know this as they aren't paying shit and keep trimming headcount.

Tue, 12/10/2013 - 11:49 | 4232564 GumbyMe
GumbyMe's picture

The consumers never had any money, it's all driven by credit, and as long as there is plenty of it out there, people will buy crap they don't need, with money they don't have.


Tue, 12/10/2013 - 12:23 | 4232673 Dr. Engali
Dr. Engali's picture

Technicaly nobody has any money since the currency is based off of a fractional reserve system. Currency yes, some people have it..Money...virtually nobody.

Tue, 12/10/2013 - 11:31 | 4232502 Shizzmoney
Shizzmoney's picture

Sales? Who needs stinkin' sales?


Tue, 12/10/2013 - 11:56 | 4232588 youngman
youngman's picture

Its better than digging a hole and then just filling it in.....at least you are making something.....but do they have health Insurance....that is important

Tue, 12/10/2013 - 17:38 | 4233847 Bobbyrib
Bobbyrib's picture

"Its better than digging a hole and then just filling it in.....at least you are making something"

No, I do not live in Asia, so I am not making anything.

Tue, 12/10/2013 - 12:16 | 4232652 WhiteNight123129
WhiteNight123129's picture

I am buying the Gold dip.


Tue, 12/10/2013 - 12:16 | 4232655 michael_engineer
michael_engineer's picture

Hollow growth sounds very much in line with this analysis.


Tue, 12/10/2013 - 12:29 | 4232696 W74
W74's picture

Anyone been to a thrift store lately?  Maybe I just went at the right time on the right day, but it was packed.

Doesn't look good for JC Penny.

Tue, 12/10/2013 - 12:41 | 4232736 yogibear
yogibear's picture


Classic lipstick on a pig.

Tue, 12/10/2013 - 12:31 | 4232700 rlouis
rlouis's picture

If you like your used car you can keep your used car.


Government Motors

A politically correct corporation of the USSA

Tue, 12/10/2013 - 12:34 | 4232714 W74
W74's picture

True, but if you'd like we'll offer an $8,000 credit to turn that used car in and buy a new one at 0.8% interest over 72 months.

(And once we destroy all the used market inventory, pre-loved prices will jack 50% upward)

Tue, 12/10/2013 - 12:36 | 4232726 Nue
Nue's picture

Reminds me of the Soviet Union. The Soviets would have warehouses full of goods that no one needed or wanted. Imagine 5 million steel hammers sitting in a storage meanwhile people would be starving while grain would rot in the field due to lack of silo's and harvesting equpiment because steel was being diverted to make hammers. Of course the American econonmy is in defacto a state run enterprise at this point. So that we are seeing all the inefficiencies of the Bolshevik regimes being repeated should not be suprising to anyone.

Tue, 12/10/2013 - 12:45 | 4232753 yogibear
yogibear's picture

Maybe the government can pull a China and build ghost cities in ghost cities like Detroit.

Build new housing for the FSA.


Tue, 12/10/2013 - 13:04 | 4232812 Hongcha
Hongcha's picture

I buy US-made clothes from specialty shops via the Internet.  I usually get 100% natural fabrics and the wily Chinks fuck you with a loose weave so the sleeve is one-third of the way up your arm after the 1st laundering.  This has been the story for the past decade.  Sound familiar?

If you MUST go with a Hecho En Chine 'brand' get at least one size larger than you are.

I won't even get started on Chinese screws that strip after you adjust them once; et cetera.  And no, not that kind of screw/strip gents.

What a corruption of standards that has been forced on the US consumer since we 'opened the doors' to the intrepid East.  I search antique stores for tools and bought a shovel forged in the US at least 60 years ago that works great, for $5 at a charity shop on Clayton Road in Concord CA. 

Think what effect on the conscience this produces, esp. in young people, when you just throw everything away rather than learn to preserve it and maybe pass it along. I like to think I gave that shovel a second life.  This era will wash away like a sandcastle but until it does, best be nimble climbing the rungs while they fail under your feet...

Tue, 12/10/2013 - 13:05 | 4232849 TheRideNeverEnds
TheRideNeverEnds's picture

meanswhile, twitter gained another 1.5 billion dollars in market cap this morning putting it over 28 billion dollars; pretty good for a company with no profits and no plans to make any. 

Tue, 12/10/2013 - 13:08 | 4232873 Jameson18
Jameson18's picture

C'mon 99 cent 60 inch HD 3d internet smart TV's for the Mullets. Gotta keep them stupid, next year is an election year.


Tue, 12/10/2013 - 13:27 | 4232960 Ban KKiller
Ban KKiller's picture

Thrift stores are the new black market. Used goods are the new black. Why buy new when the rich throw away great "stuff"? These days if we can't eat it we don't buy it...except for our precious fuel. Meanwhile silver is still on sale. Goes great with beans and rice storage. 

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