Q3 GDP In Question As Inventories Stumble In September

While excuses will fly  - "it was the storms" - which apparently did not interfere with massive beats in housing data, the wholesale and retail inventory data stumbled hard in September. The prints were considerably worse than expected and throw more shade on Q3 GDP growth expectations.

 

Retail Inventories tumbled 1% MoM in September - the biggest drop since Aug 09...

 

And wholesale inventories rose at just 0.3%, missing expectations...

 

Notably, motor vehicle inventories dropped 2.6% MoM in September (but remain up 3.8% YoY).

Comments

SimplePrinciple Thu, 10/26/2017 - 09:10 Permalink

Lower inventories is a leading indicator for higher GDP as those inventories get replaced.  If the reason for lower inventories is higher import prices, then it would also indicate more inflation going forward.

SimplePrinciple LawsofPhysics Thu, 10/26/2017 - 09:41 Permalink

Yeah, uh huh, just look at food, lodging, medicine, and education.  Oh, I forgot, hedonics probably says it all gets better and better, so of course it costs more.  For example, the 2% lactose-free milk I get at Costco went from $8 to $10 recently, but now it is, drumroll, organic!  It is just so much better that in the hedonic world it probably now costs less, even though I have no choice but to pay more.PS The wife just bought 5 $1 "World's Finest" chocolate bars from the school kids.  It took her 5 days to eat em, about the same time it used to take to eat a single $1 World's Finest chocolate bar in years gone by.  No inflation there! 

In reply to by LawsofPhysics