Meet Kevin: DANGER: The Coming Recession is WORSENING
One of the top economic trends being watched this week is inventory levels. Retailer Target (TGT) warned on Tuesday that they would likely face a drop in profit margins.
The problem? A surplus of many goods. While a welcome change from the supply chain issues leading to shortages in the past year, lower profits tend to mean lower stock prices. That in turn, could be a sign of a recession ahead.
According to Target, inventory levels have shown a 61 percent rise on a quarter-over-quarter basis. And foot traffic is down about 20 percent as well. That’s a sign that the retailer may need to get more aggressive with its price cuts to lower inventory.
Other trends in the past few days likewise point to the potential for a bigger recession. One such area is in the labor market. While the unemployment rate may be low, many companies may simply not have the right number of employees right now.
These two factors could point to major deflation ahead. Companies may want to cut prices aggressively to cut their inventory before it ages.
With inflation numbers showing slowing growth and potentially peaking, investors may be blindsided by any surprise deflation in the months ahead. Prices in areas such as shipping, computer chips, and fertilizer have all shown declines in recent weeks.