Last Tuesday provided some negative indication on the demand side of the U.S. economy with January’s Wholesale Trade Sales losing -1.9% Month over Month, versus expectations of a slight increase. The print presented the largest monthly drop since March 2009’s -3.7% decrease. Additionally, the negative sales figure was also a surprise as wholesalers’ inventories stacked up another 0.6%, due to the weak demand.
The above was further augmented on Thursday as February’s advance retail sales added 0.2% Month over Month, rather than the expected 0.3%. Not surprisingly, this led to retailers' inventories stacking up, similar to the case with wholesalers. The U.S. total inventory-to-sales ratio surged to a level of 1.32, the highest since the one inflicted to the U.S. economy by the beginning of the great recession. Amongst the sectors' inventories, the Autos sector saw its inventory to sales ratio climb as high as 2.94. Preliminary indications for March were also provided on Thursday as the Bank of America noted that non-gas retail spending using its credit card during the first week of the month indicated only a modest 1.7% increase compared to the same period last year. More so, the University of Michigan’s Consumer Confidence Index was published on Friday to preset a level of 79.9, indicating pessimism unseen since November. How this will affect the Fed's tapering path this week remains to be seen.
