According to the US Census Bureau’s most recent inventory data, US retailers are keeping their inventory levels higher than what sales can support. Retail inventory growth is depicted in the following figure, along with a trend line that tracks changes from 2009 to 2019.
“It is clear here that the orange line depicting the inventories is exceeding the blue trend line. In absolute terms, the deviation, in November 2024, reached a point where the retailers’ inventories are US$30.2 billion higher than what can be accounted for by the normal trend development,” noted Alan Murphy, CEO of Danish maritime data analysis firm Sea-Intelligence.
“This brings us to a very important question: how much have actual retail inventories deviated from the trend line since 2011, when most of the post-financial crisis effects had disappeared?” wonders Murphy. And this is shown in the second figure.
The July–August 2024 upward surge is the biggest upward deviation since the financial crisis. In September 2024, the deviation was the highest at around 3.1%, but it only slightly decreased to 3% in October and November.
“For some retailers, inventory buildup may be a hedge against coming tariffs. On the other hand, a potential implication is that if consumer spending suddenly is reduced due to the inflationary effect of tariffs, the retailers might well have excess inventory on their hands,” stated Alan Murphy.
