Wholesale Trade “Gap” Reaches Record High As Sales Tumble, Inventories Rise

Worst.Case.Scenario. In 24 years, the ratio of wholesale inventories to sales has only been higher than the current 1.35x once – at the peak of the recession in the last financial crisis. Wholesale sales tumbled 1.3% MoM (worse than the -0.3% exp) and inventories rose 0.3% MoM while expectations were for a drop of 0.1% (inventories over sales difference rose from $143.6BN to $151.2BN in one month, a new record high.) And finally, automotive inventories rose to 1.78x sales – the highest since the crisis.

Keep stacking, despite tumbling sales…

Which leaves us firmly in the “recession imminent” section of the business cycle…

And there has never been a wider absolute spread between inventories and sales…

This cannot end well.