Today’s upward adjustment of GDP by .8% to 3.6% creates additional information in which to review your client / customers outlook. The bulk of the increase in GDP was inventory build equating to “businesses accumulated $116.5 billion worth of inventories during the quarter, the most since the first quarter of 1998.” (Reuters) This is followed by lack luster retail sales (see previous blog). With cheap credit and access to cash it appears the retailers have taken the risk of not losing that last sale as money is cheap so maybe they think the risk is limited. I am not sure about that. It all depends on the FMV of the goods after the holiday season. Tech related products have a limited shelf life before being outdated and thus the value of that inventory declines shortly thereafter.
Earnings outlooks continue to be fairly strong on a global basis. Let’s stay tuned and review those cash flow plans please.