In the latest signs of slowing economic growth, very poor U.S. retail sales and wholesale inventories figures have been released showing data not consistent with a growing economy. In the past two weeks, the data emerged showing that American retail sales suffered their largest decline in over nine years back in December. Sales declined consistently across all of the metrics measured — online, in physical stores, and even in restaurants.
Analysts who studied this warned of a significant economic activity slump at the conclusion of 2018. From November to December, the retail sales declined by 1.2 percent. This marked the largest decline in a month dating back to the Great Recession and Global Financial Crisis in September of 2009. This chart below tells the discouraging tale:
The restaurant sales have been particularly bad. Economist David Rosenberg observed that the sales from restaurants have dropped for four of the last five months. The pace of this decline has not been seen in a quarter of a century. It makes the restaurant sales plunge worse than in both the 2007 to 2009 and the 2001 recessions.
Yet the news emerging last week only underscored how significantly the economy is deteriorating. U.S. Wholesale inventories recorded their sharpest gain in over five years for December. This matches the decline in sales of December that had occurred for the third consecutive month.
Reuters news service put it this way: “an unintended piling up of goods at wholesalers could be flagging a slowdown in demand.”
The Commerce Department’s inventory report showed that wholesale inventories roared higher by 1.1 percent for December. Analysts had only looked for a minor .3 percent increase. Instead, they got the greatest rise dating back to October of 2013.
As if that was not bad enough, Commerce revised the November figures higher from the prior estimate of .3 percent to .4 percent. Year over year in December, the wholesale inventories jumped by 7.3 percent.
Reuters has also reported that the corporate reports for business spending on equipment plans indicated a decline in growth for the conclusion of 2018. With all of this consumer and business spending key to fueling the American economy, the decline in consumer demand is hardly good news.
Some economists have since noted that the last time these retail sales figures came out so badly as they did in December, the United States was already firmly in the grips of the Great Recession. Other signs of the economy cracking abound— just look at the record high delinquencies in car loans.
Is Your Retirement Portfolio Protected from the Collapse in U.S. Retail Sales?
What about the Federal Reserve? Have they not already turned things back around in the stock markets with their Powell Pause? Some economists like Peter Schiff are already saying it is too late to backtrack now. The Fed-induced recession is now already in the cards:
“Of course, stock market investors are clueless about that. They’re just having a party because the Powell Put is back on the table. And they think simply because the Federal Reserve is no longer hiking rates that they no longer have to worry about the Fed pushing the economy into a recession… The rate hikes of the past have already guaranteed that the economy is headed for recession. It doesn’t matter whether they continue to raise rates in the future. The recession is a done deal. It’s just now you have that calm between the storm while investors are still clueless and haven’t yet connected those what should be, very obvious dots.”
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