We have been waiting for the non-essential durable goods side of the manufacturing sector to start showing evidence of demand side contraction in consumer purchases. There have been subtle sector-by-sector indicators of consumer spending shifts for several months; however, today we get the direct evidence from Samsung.
Samsung is one of the leading manufacturers of consumer electronics and products that require chips. For three months the electronics sector has shown background signals that inventory was not moving. One of the more recent indicators of a demand side contraction was the lack of upward price pressure inside the electronics sector. Essentially, consumers are not purchasing the current inventory, so prices are actually dropping in this segment. [SEE TABLE 2, CPI Chart]:
Despite overall inflation of 8.6% within the CPI, deep inside the category indexes you will note that electronic prices are actually dropping. Televisions -9.5%, Video equipment -4.3%, etc. Video and audio products overall dropped in price 1.4% for May, and dropped 5.2% year-over-year.
The supply chain in this sector is lengthy. Meaning inventory builds slowly as consumers stop purchasing in the USA. Retail store inventory turns slow, store inventory climbs, then warehouses inventories climb as stores do not need product. The negative boxcar effect travels back to the manufacturer overseas over the course of several purchase cycles. Eventually, everyone within the sector is telling the supplier we do not need product. Then the manufacturer has to quickly slowdown raw material.
Due to lengthy supply chains, including trans-pacific shipments, the process to stop deliveries in this electronic goods sector is around 90-days before the drop in retail sales reaches the manufacturer to stop production. Here is the announcement from Samsung:
TAIPEI/ SEOUL — Samsung Electronics is temporarily halting new procurement orders and asking multiple suppliers to delay or reduce shipments of components and parts for several weeks due to swelling inventories and global inflation concerns, sources have told Nikkei Asia.
The notification by the South Korean tech titan applies to components for multiple key product lines, including TVs, home appliances and smartphones, four people familiar with the situation said, and the postponement of orders involves a wide range of components across chips, electronics parts and final product packages.
The move by Samsung, the world’s No. 1 smartphone and TV maker and one of the leading home appliance providers, is the latest sign that electronics makers are pessimistic about the economic outlook amid global inflation risks.
Samsung told suppliers that the company needs to closely review its inventory levels of both components and final products to ensure stock on hand is manageable, according to the sources. Two people said the move will last until the end of July. One of the people said shipments from that source’s company have not been completely halted but the volume of the company’s planned shipment to Samsung for July has been slashed by 50%.
Samsung’s inventory assets reached 47.6 trillion won ($36.9 billion) at the end of March, up from 41.4 trillion won in December, according to its first quarter earnings report. The ratio of inventory assets to total assets also jumped to 10.8% from 9.7% during the same period. (read more)
Various Wall Street economists and MSM pundits have stated, erroneously – and many intentionally, there has been no evidence of a demand side contraction. However, CTH reviews of the data have shown exactly the opposite. There are multiple indicators of demand side contraction, including drops in retail sales units that goes all the way back to last holiday season.
Yesterday the U.S. Dept of Commerce released the May retail sales [pdf DATA HERE], showing a 0.3% drop in retail sales for the month.
Retail sales -as measured in units purchased- have been in a contracting position since June of 2021. When the current data shows a drop of -0.3% in May, the actual drop in retail sales is much, much greater. The dept of commerce calculates retail sales in dollars. When prices are 20% higher and sales are low, retailers are selling less stuff (fewer units) at higher prices. This has been the reality of our economy for several months. This is also why productivity has been declining for more than a year.
If you take the 8.6% inflation rate (far understated) and an aggregate drop in sales of 0.3% (again, far understated as a measure of inflation), that means consumers are spending limited incomes on critical or essential purchases like housing, food, fuel and energy. Consumers are not purchasing durable goods; people are hunkering down.
Yearly retail sales (May ’21 compared to May ’22) are +8.1%. However, yearly retail inflation for the same period is +8.6%. Again, reflecting that less stuff is being purchased inside the economy at higher prices. If the commerce dept was measuring actual units being purchased, we would be seeing massive drops in sales.
Samsung is reacting to a demand side contraction.
“..evidence of demand side contraction in consumer purchases.” Not a positive sign for an economy mostly dependent on consumer spending of course.
The economy is imploding and given the time of year, it won’t be long before very negative stats about the Tourist sector begin to flow in. There aren’t any sectors of the economy that can likely evade the next wave of economic hits coming except for the politicians feeding off the Uni-party trough, the busy smugglers in the booming illegal immigration and drug sectors and the bloated numbers of Fed Gov’t workers in DC that are being fully employed to attack or arrest anyone that opposes or might oppose the Biden admin. madness.
Won’t be any layoffs in the Gov. sector that’s for sure.
People are being herded out of the private work force, and into the .gov workforce.
Its where the employment stability is.
Who needs the wage increases that the private sector affords,
land our outpaced by inflation,
when bending the knee to .gov and public unions offer unlimited money printing?
A gubmint job is job security and easy work for most of them. Have the DC workers returned back to the office yet? FJB
They don’t do much work at all.
They produce pain and suffering!!!🤠
And the vast majority of work done by government slows down the economy or is at least completely neutral in terms of production of goods or needed services. And the salaries and expenses paid for by the taxpayers also prevent real productive activity from taking place. Government is a parasite.
They’re also being herded out of home ownership. Smells like Marxism to me.
You vill own nusink unt
likehate it! – fify KlausUBI (Govt) is in a market share race with gainful employment (Private Sector) to be the #1 employer-of-record in the US.
Lockdown was one tactic. $12/gal gas will destroy the economic feasibility of lower-tier jobs. Already, entry-level folks are calling in sick due to untenable transportation costs.
An immobilized population is the collectivist’s dream.
They will need a budget increase to deal with the crisis.
Heck we sent how many billions to Ukraine for their government employees? Biden will just snap his fingers and bail out whatever government employees he needs to! Sigh…
that works until it doesn’t. germany 1918 to 1923.
Don’t count on that.
I travel regularly between Texas and California and good hotels along the I-10 seem to be at capacity most of the time. The rooms are booked in large numbers with LEOs, Military and likely other government workers. It is just easy to spot the ones in uniform and the cars in the parking lots.
Can you spell D-E-P-R-E-S-S-I-O-N? This is not a recession; it is a DEPRESSION! Thank the fool, Biden, and the other fools that voted for this incompetent imbecile!
I know I get pissy with every voter I see when I go to my local graveyard also. How could they vote this dementia ridden idiot in?!
It’s a Debt-pression that we are being fed, along with a side of mixed bitter greens.
Debt-PRISON more like it
And Zuckerbucks who filled the coffers of their steal.
Depending on where one lives. Viva 🇲🇽 Mexico Yucatan.
I think those who lived through an actual depression might disagree.
You know, this is the never let a crisis go to waste team. And the bigger the crisis, the more that can be done under the cover of the crisis.
Don’t be fooled. This is a manufactured crisis. Ask yourself, what they do differently if they were trying to crash the economy?
I agree with what you’re saying overall, but the tourist/vice industry seems to be booming in California. Indian Casinos, Pot Dispensaries and Strip Clubs are seeing record profits.
I heard recently that copy machine manufacturers are buying appliances to get chips so they can meet their own order commitments.
justlizzyp: Good. I could use a Xerox dishwasher.
Got one once,…it only copied the DIRTY dishes!
😂😂😂
Where did you hear that? That’s bull.
Let’s go Brandon.
Im a trucker and I am seeing lots of inventory at various stops and orders being produced / shipped a month ahead of time. That means, producers are short on customer orders and pulling orders from the future to the production floor and producing inventory.
They do this to keep people working but it only lasts for so long. What eventually happens is……
Yep.
Just on the unemployment numbers – in Australia we are told that we have the lowest unemployment in a long time. But I think it’s a lie. I personally know a number of people who lost their jobs with the vaccine mandates, but are not eligible for unemployment benefits – they have too much assets or their spouse has a job, etc. So these people are not counted, but are genuinely unemployed. The market is still too manipulated to give accurate and comparable numbers, and I don’t see how it even makes sense with other data – it must surely contradict itself ??
Yep they want to keep those books looking good don’t they. Nothing wrong with it I suppose but it’s short term relief. Like borrowing from Peter to pay Paul. Gotta bad feeling what approaches is going to last a long time; at least a couple years but who knows. It’s not going to be easy to steer out of this with our debt laden fiat currency. It no longer has any accountability. This works for a while until you have nations wanting to revert back to a wiser system and are ready to make it happen. They have a legitimate axe to grind and they’re going to swing away when it’s sharp.
I make my own “Liquid Fence” concoction. It smells pretty bad. You can find various recipes online. I spray it every few days and after thunderstorms. It works pretty good at keeping the rabbits and deer off of my plants.
How about obnoxious neighbor’s big dogs? Will it keep them off my lawn! What is your recipe?
Dogs probably aren’t eating your plants, just depositing free fertilizer.
In this Biden economy, I’d be all over free fertilizer right about now.
The urine burns a crater in the grass then the grass won’t grow back. I need something to spray on the grass to discourage the dogs. Anybody have a suggestion?
Bullets
:
:))
Only female dog’s urine will burn the grass. Transgendering them won’t change that either. Tell your neighbor to get dogs with testicles.
Uh oh. My male dogs’ urine burns the grass.
imo come Sept or Oct if the shipping dates for the yearly new iPhone models don’t to start to slide to the right within a few hours after pre-orders go live, that will be an indicator that people are not coughing up what cash they have just to get the latest iGadget.
Don’t count on iPhone sales as an indicator. There are enough fan boys and girls out there to keep that product moving out the door long after other products sales stagnated or stopped altogether.
I quit the iPhone years ago. Still using a dang Android phone and still seeking a viable alternative that doesn’t use a cloned Android OS.
Target has an inventory glut and is slashing prices to move items.
https://www.dailywire.com/news/target-to-slash-prices-for-tvs-furniture-because-of-inventory-glut
The stores in my neck of the woods – suburban Minneapolis – are not busy and have very few customers the times I’ve visited. Stores like Home Depot and Lowes are fully stocked and have workers but are lacking customers.
My suburb of 30,000 feels almost like a ghost town in the evening with few cars on the road, at times it is almost eerie. Some shops are still closing up early compared to the pre covid days when Walmart, McDonalds, and Walgreens were open 24/7 and the pulse of the city was always evident.
This is my experience as well (northern suburbs/Anoka county). More workers than customers at Home Depot, fewer cashiers on the daytime shift at Menards. limited pharmacy hours at CVS, early closures commonplace.
My employer is slashing prices because of inventory glut from early arrival of goods we were earlier told would be delayed.
we’re gonna be drowning in washing machines.
Who needs new gear when starving?
This! Start looking for ways to grow some of your own veggies. Get a fishing pole and tackle, learn to hunt if you don;t already.
Food dehydrators are a good way to store up fruits, vegetables and meat for that matter.
It’s never too late to get prepping and have alternative sources of proteins when the grocery stores become too expensive or even dangerous to shop. (I anticipate we will start seeing post shopping hold ups where the groceries are targeted versus the wallet or purse.)
Car jackings, where they wait till the victim has loaded up their groceries.
They will get a two for one. Free food, and free gas…
Free lead too.
I was thinking about some protein supplements from those body building types of shops. For when they only offer us bugs.
Also…….
Credit card theft. Identity theft and fraud. Skimmers on the rise!
I got “hit” last week on my debit card account!
I was lucky. Minimum damage due to controls by my bank. Bank will be refunding stolen amount.
I also did credit check run through and no impact there.
Had to be a skimmer at a gas station here in my town – I filled up and 3 days later….bam! Called their corporate office and reported. Thing is I typically never use card when getting gas.
And the places and amounts they tried to use it…youngsters. Playstation, Buffalo wild wings, Dicks sporting goods,Meijer,door dash.
Since it was such a small amount my case will just be thrown in the pot with others who may not have been so lucky and eventually they will catch them. I hope.
Have Experian Credit Lock which is good and lock and unlock feature on my bank card- which I was unaware of..and will definitely be using from now on!
Just warning everyone…be extra vigilant regarding security of your credit and identity.
I am going to be paying for almost everything in cash from now on.
And I am thinking…with “them” trying to go 100% with digital everything and the way everything is headed downward…and crime going up…..the digital world they are envisioning may be harder than they think.
First time ever got a paypal invoice for $499 for bitcoin that I never purchased… Watch the scams they will be thick!
It’s what the people voted for, right? DEMOCRATS will f**k you every way they can, and then some. Crime boss Biden is the epitome of total incompetence for 50 years! You voted for this fool and now you have to live with the consequences! Idiots!
Obiden did not get the 81 million votes they claim. IMO, he may have gotten 58 million, thanks to the Never-Trumpers. None the less, he was installed, through voter fraud. FJB and the regime.
RECIPE TO CONTROL VARMINTS AT 8:05 PM! It was on PAGE 1 of the comments.
Yea. Will buy more puts after next suckers rally
Thanks
Bidung wants to be the new FDR, complete with a depression, but he’s only the old FJB.
Well, he has succeeded at creating a depression. It’s going to be a long cold dark winter. FJB.
Q3 is going to be uglier than Fiona Hill. The mid-term steal is looking out of reach as the Red Wave will be massive.
Unfortunately, the “red wave” will be full of impostors…
I saw this coming two years ago. That when I fully divested from the market and have seen no reason to get back in. We’re no where near the bottom, in fact; this is all just starting. When people see a TV, they see a brand, when I see a TV I see all the companies that make everything that goes into it. Imagine how many thousands of people are involved in building a house and everything in it. From cutting down the trees to the smoke alarms. And that’s why I got out when I did. Interesting the article started with Samsung. I might have called it a little early, but I retired and am all cash now. Feeling pretty smart right now and a little sorry for everybody else. Very little. The one positive thing out of all of this is the price of homes and cars will finally crash down to realistic levels. Too bad it’s taking a crash to do it.
Your cash is worth 10% less than last year.
That rate of decline appears likely to accelerate.
Printing money is a roundabout tax on the people.
Real estate can stay above this, but the big money looking for investments has driven the price too high for the small investor to get in now.
Because, the globalist big money grew too huge on usury, financial shell games, and government fiat money printing, and now all that money is seeking investments outside of US manufacturing because that simply cannot compete against the Red Dragon quasi-slave system any more.
What do we see?
US Manufacturing continuing to disappear, replaced by the “service economy” and real estate developments, with signs of rental housing and storage replacing home ownership.
The robber barons of today, with government, are greasing the skids for the US middle and working class to slide into serfdom. Call it what you want, it is a mashup of marxism, cultural maoism, inverted fascism, corporatism. Simply put – the powerful steering the tectonic shift of our time.
Under complete – COMPLETE – surveillance.
All part of the Plan?
Cash? What is cash?
The Fed is going to create a major deep recession to wring out inflation by suppressing consumer demand. 100% a major recession is coming soon. Lots of pain for the middle and working class who always bear the brunt and job loses.
This is a big deal on Samsung’s part.
.
Samsung is a MAJOR manufacturer of WIRELESS equipment including 5G. For those of us in Rio Linda 5G means Fifth Generation wireless.
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Many might be surprised to hear BUT to certain demographics, wireless devises, especially 5G is considered Non-Discretionary and utterly essential.
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Some demographics might be willing to pay rent late in order to have just the right wireless device.
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Also, the wireless industry is expecting government subsidies on these 5G phone devises.
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The wireless industry is very well DIALED into the “power elite” in DC.
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The wireless industry will be very upset to know that this ongoing phone subsidy is obviously in deep JEOPARDY.
Government paychecks and checks for procurement of all manor of goods and services cannot exist without freshly printed or key stroke dollars out of thin air . Consequently every dollar paid out by government destroys the dollars you earned purchasing power continuously and now we are over the cliff !
Any question why they want every opportunity to disarm the free citizen with bull shit Red Flag Laws that violate our individual rights without due process !
Truth many cops would not be allowed to possess guns , high suicide and alcoholism rates divorce and depression wow and these guys are loose with guns
Hyper-stagflation anyone? Could catapulting interest rates put capital forever out of reach of a once-productive middle economy i.e. economic cessation and a permanent capital strike?
The route to neofeudalism could pass through hyper-stagflation. The upper 1%, having attained their AI, robotics, 3D printing & transhumanity, seek now only to curtail the mass economy and those who depend upon it (us).
Sounds like an old Johnny Carson monologue. Would never get past the woke censors in today’s humorless world.
Priceless
Disposable income is going down thanks to the gas & food prices. Said it before and will say it again Buckle your safety belts boys & girls. We are going for a wild ride. Just dawned on me that we are about the point where the roller coaster shoots off and the chain latches and drags it up the hill.
Arlan, here’s some of those Tourist sector results.
Here in Alaska, Princess Tours just closed one of it’s lodges for the 2022 summer season due to labor shortages, allocating remaining employees between it’s four other lodges. Their “butts in beds” unit productivity will certainly decline and cause shocks up and down their hospitality vertical and into their cruise ships. Many local restaurants, tourist shops and convenience stores are reducing their hours and/or closing on Mondays & Tuesdays due to inability to attract workers. It’s awful hard to make sales targets and cover fixed costs when you cut hours by 20-30%. The result: this will be a hard winter.
Yes, prices are up significantly. And yes, labor productivity and units sold are down, even up here at the top of the world.
Biden-omics sure is harder than living in Trump-town.
and yet inflation won’t subside, meaning more rate hikes.
This confirms my suspicion that the CCP’s “Covid lockdown” has been a cover story for their suddenly empty order books. Messrs Dimon and El-Erian have hinted as much.
Meanwhile our Fed is in the ‘no-win’ position of having to fight runaway inflation, while at the same time needing to pump more money into the economy in an attempt to keep it from cratering.
Unfortunately, the only historically comparable period I’ve read and heard about commenced in the year 1929.
The people need to push back against inflation. Our current fake Government won’t do it. Our only tool is reducing demand across the board.
I’d be interested in seeing if this is a trend in other products. Anecdotally, I know a lot of folks who are talking about rolling off “smart” devices since they are so obviously little more the Deep State surveillance devices.
If this is a trend in, say, … I’m trying to think of another optional purchase at that price point … maybe video games systems I’d be a little more convinced of its relevance.
Stagflation
So if I have the money- and I do- looks like I should be looking now for that 85″ television…
I’ve been shopping for soundbars the past few months, and I’m starting to see discounts, big ones, on many of them where there hadn’t been much of anything since things started reopening in 2020. I got an LG that’s normally $800 for $390 (going back, don’t like). Others I’m considering are seeing 30% to 50% off. Other non-essentials are seeing sales where you wouldn’t expect it.