Wholesale Trade Report Shows Possible Storm Clouds On Horizon

Inventories at wholesalers may be rising faster than desired. Though only 0.3 percent higher in November, inventories relative to sales was rising, to a 1.29 ratio from 1.28 and 1.27 in the prior two months. Sales at wholesalers in both November and October fell 0.6 percent.

Inventory building was a major plus for third-quarter GDP but continued building in the fourth quarter, though a possible plus for GDP, could pose trouble for production and employment in the first quarter unless sales picked up at year end. And how strong year-end demand was is still uncertain given the shutdown-related delay for many indicators including December retail sales.