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.


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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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.  

i_call_you_my_base's picture

And as if housing price spending is at all productive.

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.

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.


XAU XAG's picture

At first you go broke slowly

then bankrupt quickly


Cannot remember the exact quote or who said it

TeamDepends's picture

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

ParkAveFlasher's picture

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

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.


ParkAveFlasher's picture

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

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.


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.

Slurm's picture



Trickle Down Economics versus Trickle Down Socialism

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.

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?

viahj's picture

layoffs will be inbound for Q2 as well.

847328_3527's picture

" Change you can believe in! "


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

MonetaryApostate's picture

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

Almost Solvent's picture

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

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.

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.

Ghordius's picture

please explain with more detail what you mean with cultural suicide

chunga's picture

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

holycrap's picture

Isn't it obvious? Hotdogs....

Never One Roach's picture

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


There, does that help?

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.

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...

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?

farflungstar's picture

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


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

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 - 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.

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?


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.

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.

4 wheel drift's picture

"How did you go bankrupt?"

Two ways...   gradually, then suddenly ~ Ernest Hemingway (the sun also rises)
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....

JRobby's picture

Great help. Thanks for the contribution.

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)


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

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

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.


InTheLandOfTheBlind's picture

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

Oldwood's picture

That's democracy for you

prodigious_idea's picture

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

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. 

ali-ali-al-qomfri's picture

BR, spoken like a true master baiter.

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.

Darth Stacker's picture

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