Supply Chain Slump "Worse Than The Great Recession"

Tyler Durden's picture

Submitted by Jeffrey Snider via Alhambra Investment Partners,

Not to continue beating a dead horse, but I have a stick and the carcass is right in front of me. The entire supply chain inside the US economy is full agreement both on where the economy is right now and, perhaps more importantly, how it came to be that way. Such harmony is not atypical, as synchronicity usually defines the hard edges of any cycle. This, however, is something else entirely, especially as it stretches back years and confirms we are witnessing nothing like the usual.

As it is, this latest part or phase or whatever has already taken up nearly two years. In terms of wholesale sales, as noted this morning, overall sales peaked in July 2014 – meaning nineteen months (thru Feb 2016) of deceleration into sustained contraction. Worse and what is probably the most concerning is that after those nineteen months inventory is only just now starting to correct, and it is doing so ever so gently. That suggests again slowdown without yet any visible end. In that sense, recession might actually be the best case since it would greatly speed up the affair in at least the convergence and reversion of inventory to sales (though that would still leave questions about the economic trend after it).

By comparison, the Great Recession featured just nine months of contraction; the whole of the dot-com recession twelve. Those were both top to bottom, peak to trough, over and done with. In 2016, we are very likely facing two years and still only the beginning of reconciliation or balance, and no idea what that might mean further down in wider economic feedbacks and negative multipliers.

The supply chain, top to bottom:

ABOOK Apr 2016 Boiling Frog Retail SalesABOOK Apr 2016 Slowdown Wholesale SalesABOOK Apr 2016 Boiling Frog Factory Orders


One other noteworthy interpretation: to find the “goods economy” including the whole of the supply chain in such joined, steady dislocation cannot be anything but a negative comment on the whole of the economy, services included. That starts with the fact that a significant portion (as much as half) of the “services economy” directly addresses the “goods economy” (retail, wholesale, transportation, etc.). Beyond that, if there is total breakdown in growth and advance in goods that can only mean a serious problem with US consumers. It has already forced economists and policymakers to completely abandon what was in late 2014 and early 2015 inarguable recovery and success. Just because it has not, so far, acted like recession does not propose a clean bill of health (just like it did not, last year, recommend this was all some temporary slump worthy of nothing but dismissal). Instead, that it has continued on for so long suggests quite the opposite, and, again, likely worse than just recession prospects in the long run.

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Infield_Fly's picture
Infield_Fly (not verified) Apr 11, 2016 7:27 AM



SPX near all time highs.


Nice job Yellen.  Nice job Barry.



Cognitive Dissonance's picture

So Yellen is correct? There is no bubble?

Theonewhoknows's picture
Theonewhoknows (not verified) Paul John Smith Apr 11, 2016 7:54 AM

There is no bubble - it's just system inflated so much that they want to keep printing while everyone says the real economy looks as good as stock exchange. Central banks spinning their bubblenomics carousel under BIS (Bank of International Settlements) will inflate their way out of developed world debt. You have seen it in the US with Yellen making her statements, with 'anti-slump' team intervening to provide support against stocks closing in the red or random blackouts at NYSE and others. The ECB with its helicopter money - oh Draghi gonna love this one. I gave up on Japan long time ago - after not learning one simpl elesson for 3 decades I don't even pity them. Now China will join the congo line

Bindar Dundat's picture

There is an old saying here in Canada.  "When the horse dies -- dismount."


So get off the FXXking horse already! 

StackShinyStuff's picture

"Worse than the Great Recession"  No it isn't.  It's all in your mind. Just shut up and BTF whatever.

MillionDollarBonus_'s picture

Today's article at the Accredited Times covers the exciting demographic trends that are shaping America's political landscape, and making us more amenable to progressive values than ever before. We need to continue to diversify our demographics in order to remove traditional opposition to societal progress, so that we can finally make America a truly liberal democracy.

NoDebt's picture

Amen, MDB, amen.  Let's push this whole thing over the cliff as quickly as possible.  The faster we get to liberal socialism the sooner we can start to collapse it and move on to righteous fascism or, if we're lucky, an outright dictatorship.


Yes We Can. But Lets Not.'s picture

Let's hope that dictator will be deeply accredited.

Rabbi Chaim Cohen's picture

Its ALL bubble. Without ZIRP those charts would look very different.

Even with ZIRP the US GDP has been, on average, slightly contracting since 2006 if corrected for population growth.

But, don't say the R-word.

And don't even THINK the D-word.

WTFRLY's picture

Joo World Order loading... ... ... 86% (Do joo want to unpack Greater Depression kernels now?) Yes?


Son of Loki's picture

So it's all Bullish, right?

VAD's picture

God damn right!  Full (retard) steam ahead!  Let's crash this bitch and get it over with.

Sloth Dabski's picture

Why the fuck does MillionDollarScumbag even bother to post here?

NoPension's picture

If you "work" for the government, or you work for a government contractor...what recession?

And if you are doing ok, and everyone else is eating's even more better.

If they're gonna print it and give it away, at least try to spread it around. I can't believe I'm complaining I don't get free shit. But I guess that's better than hoping for collapse to level the field and get things restarted.

It's a crooked and rigged system.

CPL's picture

It's more like a Jenga tower.

Buckaroo Banzai's picture

Jenga tower, surrounded by rags soaked in gasoline, in a dark room with no lights.

"Something smells funny. I can't see a thing. Anybody got a match?"

Paul John Smith's picture

It's a recovery summer miracle ...


(the recovernator)

(now go back to watching your tube and eating your Monsanto cancer nuggets)

(bleed out your butt, like a good little slave)

undertow1141's picture

Mmmmm Olestra. Nothing like oily anal leakage.

ebworthen's picture


NIRP and QE4!  More free FED and Treasury money for stock buybacks and the banks!

slaughterer's picture

On this news everybody is going 300% long following the advice of their "everything will be ok" heroes Hugh Hendry and Laszlo Biryiani.   

Paul John Smith's picture

"Yeah ... but ... go watch a squirrel water skiing .."

(everything is fine)

wmbz's picture

Great news!

Now all we need is for Gramps Yellen (after her meeting with the clown Obozo) to spread a little sunshine.

MOAR...Followed by.... NIRP.

That should really get the party started!


scubapro's picture


i think she's going to try to crash it, just a herd them into 

safe assets....then buy the crap on the cheap and do the  whole deal before markets can truly price it all vaguely properly

RawPawg's picture

why even bother saying the word RECESSION anymore?

even with all the indicators showing us there is one currently going on,the world powers still say it ain't so

that is all i gots to say about it

as i quietly go about my continued stacking,prepping,etc,etc

scubapro's picture

a la 1984 words have changed meaning to fit govt narrative.   bubbles are prosperity, recessions are what happened in the past...and arent acknowledged except briefly as they occur and are overcome....just dont get caught holding the bag when it does happen--those are the cullings" that occur during any purge.

new game's picture

falling nominal incomes is a reccesion on a personal level, plain and simple. debt bridges the gap for only so long. we are there. so free money on top of fsa handouts? money to the working plebs to bridge the gap-lol...

bernie for prez-bring it fwd now venzuala style, not lol'g, but reality in a fcuked up world of dumb numb and number...

the matrix gathers moar and moar to consume the greater good of the people like you and I.

Secret Weapon's picture

Get used to saying Depression.  More accurate description of what is going on in the real world. 

Baa baa's picture

Me too but I worry that preparation will only prolong the agony.

Baby Eating Dingo22's picture


Everyone knows a Greater Recession is better than a Great Recession

Good thing is we'll never see another Depression.Just increasingly fantastic recessions

Looking at those charts/Rorschach tests. Wad blowing comes to mind


Cautiously Pessimistic's picture

My main concern this week, as I am sure it is you guys too, is who will be kicked off DANCING WITH THE STARS!!!!


(stay in the pot and boil you little fiction peddling froggies)

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Cautiously Pessimistic Apr 11, 2016 7:44 AM

I'm pretty stoked that House of Lies will be starting back up soon

Caleb Abell's picture

House of Lies?


Are you talking about the TV show or the white house?

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Apr 11, 2016 7:43 AM

If the claim is that this is worst than the "Great Recession", why do all the charts start at Jan 2009 rather than something like Jan 2006 where we could see the development of the last recession vs what we see today?

Also the charts show that we have had at least 5 years of non-stop growth in factory orders from 2010-2015, growth can't continue forever however a decline does not automatically mean a recession.  It would be useful to see what the actual dollars or orders are or the actual units versus just seeing a growth rate.  I doubt anyone would expect an item to continue growing year after year with no periods of decline, that just seems silly.

Lastly the 2009 portion of the charts are cut off because the axis doesn't allow the full value of the decline to be seen.  If we are trying to say the current period is worst than the last recession we should at least see what the actual bottom was in 2009 for these measures.

Newbie lurker's picture


I feel the same way about the trend chart lines and arrows. Guess what, if the trend doesn't continue with the trend line, just move the line up a couple notches. Boom your predictions will still work a few more times making predictions right for months to come.


Meanwhile we all anxiously await pitchforks and torches To no avail

Baa baa's picture

Not enough to be smart to work for these cocksuckers, you have to be cunning.

Jethro's picture

I'm in full agreement. You've got to also wonder how much of this production chart in positive territory is channel stuffing distortions from the Fed.

Dr. Engali's picture

Clearly this guy is peddling fiction.

brada1013567's picture

Bailouts for everyone.

Tjeff1's picture

This.... brought to you in large part due to the higher prices in health care due to Obamacare.  

MasterControl's picture

Barry is far worse than GW could ever be.

wwxx's picture

I give you a down vote, for not blaming GW squarely.



fishwharf's picture

That's why Poppy picked Obummer out of the crowd.  He makes W look good.

roddy6667's picture

They are all puppets. You have to look behind the screeen to see who is pulling the strings. Not that you can do anything about it.

herkomilchen's picture

Not to continue beating a dead horse, but I have a stick and the carcass is right in front of me.


new game's picture

definition of hamburger for dogs...or vultures(wall st).