Sunday, October 9, 2011

Demand Collapse!




Retail demand collapse precedes capital equipment fail, says a Karl Smith chart

OK. I stand corrected, retail collapse then producer collapse.

But, lets look at on line sales and new orders:


On line sales do not include the household transportation components, gasoline and car costs. Here we see capital goods and consumer goods dip coincidentally.  The initial consumer drop must have been personal transportation costs.

Consumers initially just managed their transportation costs, used the car more judiciously, planned trips and accepted higher prices to reduce the gas lines.  Then, later, all distribution dropped rank, almost simultaneously.  What collapsed first, producers or consumers? Initially consumers managed transportation costs very well, and demand in that sector dropped.  Then large producers dropped out, lowering producer demand for inputs. Then real retail prices also rose a bit, dropping consumer demand a bit more.  What remains is a matched set of consumer demands and producer supply that works a $85/barrel oil prices.

What triggered he whole thing? A desire by all parties to keep wait queues less than three cars at the fuel station.

1 comment:

elo boosting said...

i like your own composing, it's therefore understandable, enjoyable as well as readable.. thx.Cheap Fifa 14 Ultimate Team Coins
League of Legends elo boost