September 11, 2016

A Recession Indicator?

Filed under: Economy,Taxes & Government — Tom @ 10:37 pm

If it’s not, it’s pretty darned close, given that wholesale sales are about 30 percent of GDP:


Going back to 1992 when such recordkeeping began, wholesale sales have never dropped as much in any July as they did this year, in dollars or percent. The seasonal adjustment to a mere 0.4 percent drop is hardly credible.

If there’s a “saving grace” to this, it’s that July only had 20 Monday-Friday non-holiday business days, while June had 22. But retailers usually accept shipments from wholesalers six days a week, so I would think that there’s less to that comparison than meets the eye.

Longer-term, January-July 2016 sales are running very slightly below 2012, and miles below the three years in between. How can an economy generating wholesale sales worse than 4 years ago be genuinely growing?

August’s numbers, and any revisions to July, will be crucial.

Also to be clear, the third quarter may not go negative because the government uses the seasonally adjusted numbers. But on substance, another month or two of what we saw in July will mean that 30 percent of the economy is in a genuine downturn.



  1. Isn’t the real recession indicator: (CPI + population growth) – GDP growth?

    True Expansionary GDP growth must exceed the CPI and Population growth in order to actually increase the standard of living those at the bottom of the economic ladder or at least the profit margin for companies to risk investments in plant and equipment (which increases employment).

    With anemic GDP growth, the average person is losing ground.

    Comment by dscott — September 12, 2016 @ 5:00 pm

  2. They’ve never taken population into account (which puts the supposedly fabulous 1950s in a not so good perspective. That’s the biggest reason why growth needs to be at least 3 pct. consistently and not just 2 pct., because with 1 pct. population growth, 3 percent is really twice as good. 2 pct. is pathetic.

    Comment by Tom — September 12, 2016 @ 5:55 pm

  3. To put a fine point on the issue, this is why unrestrained immigration is bad for the country. The flooding of the country with more people than can be absorbed lowers the opportunity for those at the bottom to rise up the economic ladder. A rising economic tide can not float all boats when they are over loaded. IF Bush and Obama had enforced the border and deported those caught, even with the excessive regulatory environment or interference, the lower and middle class would have done okay. But as usual liberals over due their advocacy and work at cross purposes to each other.

    You can do one (regulatory interference) or the other (immigration) but not both. This is why the economy was moving along under Bush with very low unemployment until the price of gas sky rocketed and the liberal policy of the CRA giving out zero interest loans created a bubble that exploded. They never learn, they always push their agenda to the nth degree with the resulting misery experienced by those who can afford it least, the poor.

    True immigration reform has to tie immigration rates (both legal and illegal) to GDP growth and Inflation.

    Combined with a reformed foreign policy that stresses economic development for our allies and third world countries which focuses on the difference between our system that creates wealth and their crony systems that squander wealth. Only when we insist that cronyism is the one of the world’s threats that must be addressed can we truly maintain stability within our borders. It is simply not enough to maintain peace for economic activity to flourish but address the obstacles that limit economic activity. There is a reason why Europeans and others invest in the US, that reason must be replicated elsewhere.

    Comment by dscott — September 13, 2016 @ 7:44 am

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