Even as American consumers pay more for health care, for homes, for insurance and for cars, the “stuff” economy continues to decline.
Layoffs continue across the freight and logistics industry, with companies in Florida, Georgia, Illinois, Michigan and Texas announcing job reductions and facility closures over the past two weeks.
Universal Logistics
Warren, Michigian-based Universal Logistics is permanently shuttering two of its subsidiaries and laying off a total of 677 employees, according to notices recently filed with the state. . . .
. . . Universal Dedicated of Detroit’s closure will affect 230 truck drivers who worked from the facility. Logistics Insights Corp.’s closure includes 164 warehouse workers, 212 forklift operators, 26 dockworkers and 45 clerical employees.
This is not the only indicator of a decline in the “thing” economy.
As I mentioned on another thread US retail sales (including online sales)
are down 3.4% YoY in real terms.
All these layoffs also demonstrate the tentative and fluctuating nature of the labor market and how the idea of arbitrarily flooding the labor market with uneducated and unskilled labor is utterly asinine!
We’ve had a string of trucking accidents in my state – and I’m flabbergasted by the way media report that the various drivers don’t speak English. Just matter-of-fact statement, and move on to whatever talking point they want to emphasize. I’m sure those drivers are willing to work for less than other drivers, so they’re gonna get snapped up by the trucking companies. But this is not right. And that’s just trucking as an example.
When purchases are expected to decline business take steps to avoid increasing inventory. That means fewer orders to fill and to ship. Do we have any graphics on regional inventory levels for goods? High inventory levels coupled with declining orders is a byproduct of slowing economic activity.
A drop in delivery vehicle sales makes sense. Consumer purchases fall because they can no longer afford discretionary purchases, which leads to a drop in deliveries from retailers to customers. This leads to a drop in the need to replace delivery vehicles by retailers and a drop in their orders to manufacturers for new stock, due to rising inventories. This leads to excess capacity in the transportation industry, and resulting lay-offs. This should lead to excess used heavy trucks becoming available on the secondary market and a drop in new heavy truck purchases by transportation companies. The next step should be a decline in import orders for manufactured goods and a resulting excess of capacity in global shipping and a slow down in manufacturing as the supply chain clogs with produced goods from canceled orders.
In the 1990s retailers used to keep about 60-days inventory on hand that has been slowly changing and is now ~40 days. (No big deal there.)
In Oct 2021, (black line) inventories-to-sales got really really small.
Since Mar 2022 sales have leveled-off. In fact, as my earlier chart shows inflation-adjusted sales are down 3.4% ttm. Inventories continue to build, though the ratio is not yet at problem levels (still below 40 days which is the pre-pandemic norm).
IOW the inventory-to-sales ratio is not yet problem. What is a “problem” is the fact that sales are leveling -off and inflation adjusted sales are down 3.4% ttm.
