Scotts Miracle-Gro Is Buried in Fertilizer

Please consider the Wall Street Journal article From Shortage to Glut: Scotts Miracle-Gro Is Buried in Fertilizer.

Never in the modern global economy have businesses seen such a rapid shift from shortage to glut.

Just months ago, the chief executive of Scotts Miracle-Gro Co.was bracing for the biggest summer ever. After two years of struggling to fill store shelves, the company had ramped up production to catch up with consumer demand for lawn seed, fertilizer and other garden products. Investments in new manufacturing capacity were paying off as the 67-year-old CEO prepared for the usual rush of May orders from retailers looking to replenish their stocks.

The orders never came, and by Memorial Day, Mr. Hagedorn knew his company was in trouble. Scotts has already cut about 450 jobs, or around 6% of its workforce, since May, and more layoffs are coming.

Versions of this story are playing out across business sectors, where makers of everything from clothing to kitchen appliances have gone from trying to catch up to demand to buckling under the weight of their own inventory, in a matter of weeks. Now many companies are cutting jobs, idling plants and working to undo many of the other steps they took to ensure they would have enough products to sell.

Newell Brands Inc., the maker of Yankee candles and Sharpie markers, said that in a span of six weeks starting in early August, it went from being comfortable with its retailer stocks to cutting its sales and cash-flow forecasts for the year after chains slashed orders.

Illusion of Shortages Caused by Cheap Money

The never was a shortage of Miracle-Gro, Yankee Candles, or Sharpies. 

Instead, there was an overabundance of  free money from Congress and cheap money from the Fed. 

Once the free money was spent, people already had their fill of Yankee Candles and Sharpies. 

The same applies to housing. There was not a big shortage of houses in either 2008 or 2021 except at ridiculously low interest rates that never should have been.

Demand for everything soars if money is cheap enough. With housing, bidding wars stopped once interest rates got high enough.

The false signals given by free and cheap money caused many manufacturers to make too much stuff and many retailers to order too much stuff. 

Please note New Home Sales Crash Accelerates, Sales Down 12.6 Percent in July

New home sales are down 12.6 percent from a month ago and 29.6 percent from a year ago.

And Mortgage Rate Locks Are Down a Whopping 57 Percent From a Year Ago

On August 18, I noted Existing-Home Sales Fall 5.9 Percent, Down Sixth Consecutive Month and 25.9 percent since January.

With mortgage rates at or near 6 percent, demand for houses have crashed. 

There never was much of a housing shortage. Rather, there was artificial demand when the Fed had money at 0% and mortgage rales were below 3 percent. 

FedEx Withdraws Full Year Guidance and Will Close 90 Offices

FedEx says "Macroeconomic trends significantly worsened" and has resorted to cost cutting measures including office closures.

63 Percent of Small Businesses SMBs Have Put Hiring on Hold

Please note that 63 Percent of Small Businesses SMBs Have Put Hiring on Hold

Orders have fallen off the cliff. 

On August 3, Amazon announced it had slashed its work force by 100,000.  

Increasingly Likely That Alleged Job Strength is a Mirage of Part Time Second Jobs

There is still a lot of slack in the leisure and hospitality sector, but it's Increasingly Likely That Alleged Job Strength is a Mirage of Part Time Second Jobs

This post originated at MishTalk.Com

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