Inventory-to-Sales Ratio
Track the business inventory-to-sales ratio. Rising inventories relative to sales signal goods are piling up and production cuts are coming.
Current Value
Trigger Level: Rising ratio = goods piling up unsold
AI Analysis
As of February 22, 2026, the inventory-to-sales ratio stands at 1.37, indicating a slightly elevated level of unsold goods. This rising ratio suggests that retailers are struggling to sell their inventory, which could signal increased recession risk if the trend continues.
What is the Inventory/Sales?
The total business inventories-to-sales ratio measures how many months of sales are currently held in inventory across manufacturing, wholesale, and retail. A rising ratio means goods are selling more slowly than they're being produced.
Why It Matters for Recession Risk
When inventories pile up relative to sales, businesses respond by cutting production and orders — creating a negative feedback loop. Rising inventory-to-sales ratios have preceded manufacturing recessions.
Historical Context
The ratio spiked to 1.67 during the 2008 recession as demand collapsed. Current levels around 1.37 are elevated compared to the pre-pandemic trend of 1.32-1.34.
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