It is a trend I have been following for some time….global growth is slowing down at a time in the cycle when you would usually expect to see inflation and supply bottlenecks. If it were not for the very high levels of asset focussed money supply growth over the last few decades and the build up of debt and asset values (dependent on this growth), I would not be ringing any bells. But the divergence between what asset values need growth to be and what growth is turning out to be is the problem.
US retail sales (I am still waiting for the CPI update which will allow for a better assessment of retail volumes) took a further hit in March:
The biggest contributor to the recent slide has been motor vehicles and parts sales. This component has also been the biggest contributor to retail sales growth post the 2008/2009 recession and a large contributor to significant increases in consumer credit debt loads:
The inventory picture has also darkened with the longer term inventory to sales relationship showing an unusual divergence:
Last month’s analysis