A 26% increase in inventories since this time last year has added up to $44.8 billion between S&P consumer indexes with a market value of at least $1 billion and reported earnings in the last two weeks, according to a Bloomberg report. Target reported a 43% increase in inventory, Walmart reported a 32% increase, Macy’s reported a 17% increase, and Costco reported a 26% increase.
Retailers will now face paying more in storage fees or issuing discounts to make room for more inventory. The latter could be especially difficult for businesses, given the steep rise in inflation. Excess inventories typically signaled a recession and/or overall economic downturns in the past. Goldman Sachs predicts a 35% chance of a recession in the next two years, while Wells Fargo’s economic model projects a 30% chance of a recession occurring in the next six months alone.
Walmart shares are up at over $128 a share at the time of this report, along with Costco at over $470, Target at over $167 per share, Macy’s at over $23 per share, and Gap at over $11 per share.
Meanwhile, the personal consumption expenditures price index decreased to 6.3% in the 12 months ending in April. Personal consumption expenditures, when adjusted for inflation, continued to increase by 0.7% since March. That’s the largest rate it has increased in the last three months.