One of the problems with GDP as a statistical Swiss-Army knife for economic considerations is its very methodology. This doesn’t mean that there aren’t good and sound reasons for that kind of construction and presentation, only that in making such choices some elements are left out; even important pieces. In this case, I refer to the double counting problem which GDP solves by only incorporating “value added.” In other words, the supply chain is effectively abbreviated and minimized.

Again, there is appropriate justification for this approach; endeavoring to construct a single metric for what is produced, you don’t want to include that product being resold repeatedly. Thus, total sales for wholesale and retail are not simply added up along with manufacturing. The supply chain at various points only contributes “value added” principles at each step along the way – placing GDP from the perspective of the end user.

But the businesses and resources that take those accounts, especially labor, are not so condensed. Revenue in the wholesale segment, for example, isn’t just set aside for wholesalers as it, in fact, contributes a great deal to the prices and utilization of the products passing through its contributory activities and functions. This is where inventory becomes a heightened consideration particularly around economic inflections.

Concurrent with the retail sales report, the Commerce Department supplies its estimates for the full supply chain (just one month further in arrears from retail sales). Combined with wholesale sales and inventory, the current state of the “goods economy” is downright dire and in a way that isn’t yet captured at the top levels into GDP and even retail sales. For example, total retail sales for October 2015 are estimated to be 1% above October 2014. That figure is awful by itself, but it in many ways covers up how much worse it has been underneath that supply/sales level.