by Sundance at The Conservative Treehouse
We have been waiting for the non-essential durable goods side of the manufacturing sector to start showing evidence of demand side contraction in consumer purchases. There have been subtle sector-by-sector indicators of consumer spending shifts for several months; however, today we get the direct evidence from Samsung.
Samsung is one of the leading manufacturers of consumer electronics and products that require chips. For three months the electronics sector has shown background signals that inventory was not moving. One of the more recent indicators of a demand side contraction was the lack of upward price pressure inside the electronics sector. Essentially, consumers are not purchasing the current inventory, so prices are actually dropping in this segment. [SEE TABLE 2, CPI Chart]:
Despite overall inflation of 8.6% within the CPI, deep inside the category indexes you will note that electronic prices are actually dropping. Televisions -9.5%, Video equipment -4.3%, etc. Video and audio products overall dropped in price 1.4% for May, and dropped 5.2% year-over-year.
The supply chain in this sector is lengthy. Meaning inventory builds…
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