Biggest Inventory Build In History Prevents Total Collapse Of The US Economy

Tyler Durden's picture




 

While we already observed that in Q1, US GDP rose by an appalling 0.2%, far, far below the consensus Wall Street estimate (in case you missed it, here again is the one thing every Wall Street economist desperately needs) and precisely in line with the Atlanta Fed forecast which we brought attention to in early March, confirming yet again that US stocks no longer reflect any fundamentals but merely Fed and global liquidity injections, there is something far more disturbing under the surface of today's GDP report.

Inventories.

Specifically, the $121.9 billion increase in private, mostly nonfarm, inventories in the first quarter.

Cutting to the punchline, this was the biggest inventory build in history.

 

Another punchline: in Q1 2015, the US economy rose by a paltry $6.3 billion in nominal terms to $17.710 trillion.

Here is how the total GDP growth compares to just the increase in inventories, which as we wrote earlier this week, is the primary reason why the world is now gripped in a global deflationary wave.

 

In other words, if US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.

Oh heck, just round it down to -3.0%

Which means that as this massive inventory overhang is eventually cleared out (once the US runs out of space to store all these widgets, gadgets and raw materials, here's looking at you Cushing) US GDP will be pressured even more with every passing quarter, or else the moment of deflationary rapture when everyone is forced to liquidate and/or dump this inventory at the same time, will result in a monetary supernova which will leave the Fed with no choice but to literally paradrop money on the continental US.

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Wed, 04/29/2015 - 09:32 | 6042340 i_call_you_my_base
i_call_you_my_base's picture

Green shoots.

Wed, 04/29/2015 - 09:35 | 6042356 slaughterer
slaughterer's picture

The lying bullshit e-CON-omy is on its desperate last legs, stocking up useless shit that nobody will ever buy.  Love the health care cost portion of spending: as if health care really cares.  

Wed, 04/29/2015 - 09:37 | 6042368 i_call_you_my_base
i_call_you_my_base's picture

And as if housing price spending is at all productive.

Wed, 04/29/2015 - 09:43 | 6042400 Headbanger
Headbanger's picture

The inventory build has got to be mostly oil related.

But it still means GDP was solidly negative without even half of it.

Wed, 04/29/2015 - 09:46 | 6042428 pods
pods's picture

Okay, now that we are fully stocked up on skittles, time to saddle up the unicorns!

I think that the worst part about all this is realizing that we are not going to go out with a bang, nor is there going to be a chance to start over. Nope, gonna be a long, slow way down, which gives ample time for reflection.

pods

Wed, 04/29/2015 - 09:51 | 6042449 XAU XAG
XAU XAG's picture

At first you go broke slowly

then bankrupt quickly

 

Cannot remember the exact quote or who said it

Wed, 04/29/2015 - 09:56 | 6042476 ParkAveFlasher
ParkAveFlasher's picture

Hemingway. 

Wed, 04/29/2015 - 09:59 | 6042486 TeamDepends
TeamDepends's picture

Maybe we could build a fire, sing a few songs....

Wed, 04/29/2015 - 10:02 | 6042502 ParkAveFlasher
ParkAveFlasher's picture

The best moment: "Why don't you put her in charge?!"

Wed, 04/29/2015 - 10:35 | 6042641 Miffed Microbio...
Miffed Microbiologist's picture

Actually, I wouldn't mind but some may be a bit shocked what I would do. Probably best if I stay contained with the microbes.

Miffed;-)

Wed, 04/29/2015 - 10:48 | 6042704 ParkAveFlasher
ParkAveFlasher's picture

"They're dead, alright?  Can I go now?"

Wed, 04/29/2015 - 10:59 | 6042750 Miffed Microbio...
Miffed Microbiologist's picture

Yup, I believe in short and simple. I live in a world of namby pamby bullshit and I'd love to clean up this putrid mess and go home to my garden. My gifts are under appreciated.

Miffed

Wed, 04/29/2015 - 11:13 | 6042821 IRC162
IRC162's picture

Welcome to New America.  The economy is so fragile and unpredictable that businesses are finding it safer to invest in tomorrow's COGS at today's prices rather than see how much less X tomorrow's dollar will buy.  A similar hedge will soon to be more apparent as the (aware) masses overstock their pantries and toiletries as a safer investment than chattel paper.

Wed, 04/29/2015 - 11:50 | 6042980 Slurm
Slurm's picture

 

OBAMA vs. REAGAN on GDP GROWTH — NOT EVEN CLOSE

Trickle Down Economics versus Trickle Down Socialism

http://www.thegatewaypundit.com/2015/04/obama-vs-reagan-big-government-s...

Wed, 04/29/2015 - 12:31 | 6043106 macholatte
macholatte's picture

 

 

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

 

The dialogue above is from Ernest Hemingway’s 1926 novel, The Sun Also Rises.

Wed, 04/29/2015 - 12:42 | 6043149 knukles
knukles's picture

Historically when inventories rise by unfounded amounts, production is cut back to restore the inventory imbalance.
Almost Regardless of the pace of sales.
Slower GDP in Q2, anyone?

Wed, 04/29/2015 - 13:03 | 6043228 viahj
viahj's picture

layoffs will be inbound for Q2 as well.

Wed, 04/29/2015 - 13:06 | 6043238 847328_3527
847328_3527's picture

" Change you can believe in! "

 

... or should it be, "bereave ?"

Wed, 04/29/2015 - 15:30 | 6043830 MonetaryApostate
MonetaryApostate's picture

Believe in economic terrorism, because that's what they have planned for us all...

http://galeinnes.blogspot.com/2015/04/economic-terrorism.html

Wed, 04/29/2015 - 11:16 | 6042834 Almost Solvent
Almost Solvent's picture

You don't see them fucking each other over for a goddamn percentage.

Wed, 04/29/2015 - 15:47 | 6043887 mkkby
mkkby's picture

Jeezus, are you faggot doomsaysers out again over a measly 3% decrease, that didn't actually happen?  Go back down into your basement and play video games for another 5 years.  It ain't happening soo.

Wed, 04/29/2015 - 10:45 | 6042684 Pairadimes
Pairadimes's picture

The American economy is dead on its feet, a victim of cultural suicide. It has been dead for years now. It is just so damn big that it is taking forever to fall over. But when the body hits the ground shortly, things will get really interesting around here. Americans have no experience with this kind of event, which will make matters much worse.

Wed, 04/29/2015 - 11:20 | 6042801 Ghordius
Ghordius's picture

please explain with more detail what you mean with cultural suicide

Wed, 04/29/2015 - 11:21 | 6042864 chunga
chunga's picture

Baseball where fans aren't allowed, monsanto apple pies, and bankrupt chevrolet...where the hell does one begin?

Wed, 04/29/2015 - 11:33 | 6042910 holycrap
holycrap's picture

Isn't it obvious? Hotdogs....

Wed, 04/29/2015 - 11:59 | 6043006 Never One Roach
Never One Roach's picture

" Cultural suicide " as in, " Rome got 'culturally suicided' and finally collapsed in 476AD. "

 

There, does that help?

Wed, 04/29/2015 - 12:37 | 6043130 macholatte
macholatte's picture

 

 

Cultural Suicide When people totally neglect their own culture and imitate another culture. many people think that globalization has caused young people to culturally-suicide. -------  ------- We are blind to the contradictions in welcoming an immigrant but not making him one of us. Multiculturalism — as opposed to the notion of a multiracial society united by a single culture — has become an abject contradiction in the modern Western world. Romance for a culture in the abstract that one has rejected in the concrete makes little sense.

  http://www.nationalreview.com/article/349447/western-cultural-suicide-vi...

Wed, 04/29/2015 - 16:32 | 6044075 farflungstar
farflungstar's picture

"When people totally neglect their own culture and imitate another culture"

 

Reminds me of all the confused white kids who are intensely ashamed of their whiteness and therefore imitate the black culture. And so much to work with there: No need for proper grammar, belts for your pants, jobs for money, dads for kids...

Wed, 04/29/2015 - 12:44 | 6043161 Herd Redirectio...
Herd Redirection Committee's picture

The US Gov't (and the nation in general) has been 'busted out'.  Stripped of everything valuable, and saddled with debt.

By whom.... Who got fantastically wealthy from this process?

Wed, 04/29/2015 - 16:31 | 6044089 farflungstar
farflungstar's picture

Wasps and Juden, with a few coloreds thrown in for diversity.

 

Wed, 04/29/2015 - 12:01 | 6043020 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

Baseball-Fantasy League

Hot Dogs-Pink slime

Apple Pie-Cheese cake

Chevrolet-Electra Townie 7D

 

welcome to the new economy

Wed, 04/29/2015 - 11:38 | 6042934 Totentänzerlied
Totentänzerlied's picture

Cultural suicide is just a rather extreme/pedantic/myopic/static-worldview description of societal transformation. You could say it means society abandoning one mode and transitioing to another, but that would be reifying a hilariously static conception of society. (Society is more a process, a metastable system, than a thing).

Nonetheless it's an extremely popular notion. Just about every survivng written social commentary from every civilization has stated it in some way - society always ain't what it used to be. Why, before the so-called Enlightenment, it was a common historical schema - http://en.wikipedia.org/wiki/Ages_of_Man. That is, before people such as Laplace, Gauss, Quetelet, and Galton invented/discovered/developed statistical techniques allowing us to actually measure this stuff in meaningul ways.

Wed, 04/29/2015 - 13:07 | 6043245 Oldwood
Oldwood's picture

Or could it simply be that a "culture" is what defines us and unites us and to abandon it for a multitude of coexisting cultures weakens our society, destroys any sense of commonality that might actually incentivise us to work for a common good rather than individual and sometimes competing interests?

Maybe?

Many societies that have dissipated has done so through multiculturalism that has eventually dissolved and eliminated the existing unifying fabric. We are not changing into a new butterfly, we are becoming a larvae that will disappear underground for some indefinite period of time to reemerge as something completely different and unpredictable. We may experience a long dormancy of despair followed by something nobody wants to see.

Wed, 04/29/2015 - 13:18 | 6043288 Franktastic
Franktastic's picture

I like to be able to point a finger a single problem (or group of them), then use a nice length of rope to fix it.

Wed, 04/29/2015 - 10:03 | 6042507 4 wheel drift
4 wheel drift's picture

"How did you go bankrupt?"

Two ways...   gradually, then suddenly ~ Ernest Hemingway (the sun also rises)
Wed, 04/29/2015 - 09:54 | 6042463 BoredRoom
BoredRoom's picture

Meanwhile, racist negro Obama blames the Republican Congress for his violent kneegrow trash sons rioting in Balmer.....

 

DEAR LORD, I pray for  a horrible death for this race baiting muslim communist......

 

I know President Biden would only hate America half as much as the imposter_in_chimp....

Wed, 04/29/2015 - 10:58 | 6042747 JRobby
JRobby's picture

Great help. Thanks for the contribution.

Wed, 04/29/2015 - 11:27 | 6042885 pods
pods's picture

That is actually kind of funny.  To see something like what is going on, and put it through the blender to have it come out like this.

More cheese to the ghetto will solve this problem. Yep.

America is so fucking fucked it is not even fucking funny anymore.

(channeling Long Soup Line)

pods

Wed, 04/29/2015 - 11:53 | 6042904 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

i dont care much for ron paul supporters, they are assholes (ok i concede it just a handful but after the subversive shit they pulled in iowa it is hard not to bunch them together.. i will take responsilibty for being closed minded to them), but that being said.. he is right... end the welfare state now!!!!!!!!! let these people figure it out or die.... we shouldn't have to support this

Wed, 04/29/2015 - 11:05 | 6042787 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

Go take your medication.

Wed, 04/29/2015 - 11:16 | 6042835 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

downvoting truth i see.... pretty sure nafta helped do this and that was pushed by globalists bush and clinton.... and passed under clinton.... not advocating voting r but if you vote d you deserve what you got

Wed, 04/29/2015 - 11:28 | 6042893 pods
pods's picture

What if we don't vote?  Do we deserve getting fucked by BOTH the D's and the R's?

Sounds kind of gangsta if you ask me.

pods

Wed, 04/29/2015 - 11:32 | 6042909 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

i don't vote and yes we still get fucked but atleast we have our conscious 

Wed, 04/29/2015 - 13:10 | 6043253 Oldwood
Oldwood's picture

That's democracy for you

Wed, 04/29/2015 - 14:44 | 6043660 prodigious_idea
prodigious_idea's picture

Until we stop voting D/R we deserve what we get

Wed, 04/29/2015 - 11:37 | 6042927 ersatz007
ersatz007's picture

What with all the chromozonal damage from the generations of inbreeding of which you are an obvious result, I guess it's hard to understand how that 'Christianity' stuff is supposed to work...brain don't work too good. 

Wed, 04/29/2015 - 12:09 | 6043045 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

BR, spoken like a true master baiter.

Wed, 04/29/2015 - 19:31 | 6044930 prodigious_idea
prodigious_idea's picture

That praying for a horrible death is one reason why religion is such a problem in the world.  And the people who practice it.

Wed, 04/29/2015 - 09:58 | 6042484 Darth Stacker
Darth Stacker's picture

Agreed. Everyone here calling for collapse. History shows it will be a slow, painful, agonizing death....and probably violent.

 

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