(Harvest) My good friend Jeffrey Snider recently cited a Wall Street Journal article highlighting a very serious slowdown in big-rig truck orders. Truck inventories are at their highest levels since before the financial crisis. Sales in March were also down 37% from a year ago as fleets remain very cautious about expanding in this environment.
Some of this reduction in 2016, as the Journal reports, is due to companies over-ordering in 2014 and 2015 based on the narrative that the economy was actually healing, or at worse would stay in its “new normal.” It raises the issue as to whether these conditions and the manufacturing recession they reflect are cyclical or structural, or both.
The contraction in goods may or may not be pushing the US economy toward recession. It is clear, however, that whatever the ultimate cycle reality, deeper imbalances run back several years.They are likely traced to decades of financialization that is now overturning. What we see in the US is a global phenomenon, which can only have one possible explanation.
