The global economic trade is down 8.4 percent so far this year. Among the many economic indicators that experts use to gauge the health of the world economy, the Baltic Dry Index (BDI) usually goes unnoticed. This Index offers an indication of the global demand and supply of major stock materials that are used by manufacturers at the beginning of production. And the shocking truth is that the index has been plummeting to reach a new low not seen before.

BDI is often considered a good indicator about the state of the global economy. Economic pundits consider the index as a crystal ball to provide insight about the general direction of the global economy.

An upward-trending BDI indicates strong global demand of commodities. A high BDI reading shows that producers are purchasing more raw materials, which in turn is indicative of growth in global economic activities. On the contrary, a downward trending BDI indicates slowdown in economic activities.

Just a month ago, BDI was showing a reading of 950, but now it has fallen all the way to 498. And when you look at the trade numbers of specific countries, the significance of the numbers become quite apparent.

US Economic Data Indicative of Imminent Global Meltdown

Warning: The latest economic data released by the US Census Bureau shows that inventories increased again, wholesales declined again, and the inventory-to-sales ratio has reached the levels that were last seen just after the 2008 global meltdown.

Inventory-to-sales ratio is an important figure that shows how long the merchandise remained hung up before being sold. This ratio has been getting worse with each passing month. This recent spike to 1.31 in August this year is the same level it had reached after the economic crises began in 2008.

Wholesale merchants are hit the most with the increase in inventory-to-sales ratio as it has tied up their capital. When they are unable to get rid of the inventory, they resort to slash orders. This creates a chain reaction affecting every member in the supply chain that may lead to disastrous consequences. The effects can range from business cycle recession similar to one occurred in 2001 to a general global crises as seen in 2008.