February wholesale inventories fell 0.5 percent from the previous month; the largest drop in nearly three years (33 months). The Census Bureau also revised the January estimate from a positive 0.3 percent to a negative 0.2 percent.
Automobile inventories were down 1 percent for the largest decline in 29 months. Surprisingly low wholesale inventories point to a struggling economy.
Optimum inventory levels depend on expected sales, and current sales are weak. February wholesale sales fell 0.2 percent from the January estimate; the fourth straight month of declines. Since sales fell relatively less than inventories, the much watched stock-to-sales ratio improved marginally to 1.36 from 1.37; but, it is still very high. Auto sales fell 0.3 percent. Weak sales provide additional evidence of a precarious economy.
The output of an economy (GDP) is computed by adding consumption, investment, government purchases and net exports. Inventory adjustments are a portion of investment. The weakness in wholesale inventories caused the Atlanta Fed to revise their 2016 first quarter estimate of real GDP growth to 0.1 percent, compared to the previous estimate (three days earlier) of 0.4 percent. On March 11, their estimate was 2.3 percent. Not only is the economy weak, it is getting progressively weaker.
Businesses try to maintain the level of inventories that will maximize profits. Holding inventories is expensive. But, losing sales because of insufficient inventories is even more expensive. Inventory levels are constantly evaluated. Twenty years ago, most businesses would take a physical inventory once during the year. Today, technology has allowed inventories to be monitored in real-time.
In the kingdom, we are told to take inventory of ourselves. Like modern inventory systems, our evaluations should be in real-time. If we will listen to and obey the Holy Spirit, He will lead us, empower us, and give us immediate feedback. We will draw closer to the Lord, move in more of His power, and fulfill the plans and purposes which He has for each of us.
We are instructed to examine ourselves. Are we in the faith? Are we passing our tests? Do we realize that Christ, the hope of glory, is in us? The following questions should help us as we take inventory:
- Do we read and study the Bible? Do we believe that it is the Word of God? Do we believe and do what it instructs?
- Do we pray regularly? Do we expect our prayers to be answered? Do we take time to listen during our prayers? Are we developing a deeper relationship with the Lord during our prayers and godly meditations?
- Are we thankful? Do we recognize Him as our Savior and Lord? Is our full confidence in Him or in our abilities, bank accounts and influence? Do we praise Him because of who He is?
- Do we routinely remember, that through the Holy Spirit, Christ is in us? Are our actions compatible with the fact that we are the temple of God? Are we striving to demonstrate the love and power that Jesus did in His ministry?
- Are we passing the tests placed before us? Do we give when it is difficult or seems impossible? Will we stand for what is right in the face of societal pressures to do otherwise? Are we willing to step out in faith, regardless of the costs, when the Lord so instructs? Will we persevere to complete the Lord's assignment when it is difficult?
Examine yourselves, seeing whether you are in the faith; test yourselves. Do you not know that Jesus Christ is in you? Unless, indeed you are disqualified (2 Cor. 13:5).
As we take our spiritual inventories and strive to correct deficiencies, we can expect our spiritual stocks to increase. We will move deeper in the things of the Lord. There will be less of us and more of Him. And one day the Lord will commend us on a job well done and call us a good and faithful servant (Matthew 25:21).
Dr. James R. Russell is professor of economics and chair of the Undergraduate College of Business at Oral Roberts University in Tulsa, Oklahoma.
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