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Are inventories piling up?
I’m more optimistic than most for 2019. I don’t think there’s any recession or major global slowdown coming but I recognize that markets are sending that signal and while I’m willing to be a bit stubborn, I’m not willing to be blind.
One major worry for me is inventories.
Here’s how the thinking goes: Tariffs and the threat of tariffs led to major inventory building in 2018. That skewed economic growth higher last year but at some point, companies will be drawing down on those inventories and it will be payback time.
So when the WSJ reports about companies “so inundated with inventory that some are renting truck trailers to use for storage space,” I get worried.
The story is largely anecdotal but notes that one company launched a mobile inventory business just this year. They also note that high inventories are typical at year end.
There is some hard data:
“Across the U.S., warehouse vacancy currently stands at 4.3%, according to real-estate firm
CBRE
Inc.,
the lowest the real-estate firm has recorded since it started tracking the figure in 1980,” the report says.