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  • Juanita Schwartzkopf

Retail Sales Impacts and Manufacturing Demand

The lingering impact of the Covid 19 shutdowns and the remote work craze continue to be felt in the economy. As lenders are reviewing their portfolios, the lenders are experiencing weaknesses in the manufacturing and retail sectors. The impacts go across the manufacturing and retail sectors with no subsector having most of the problems.

When consumers were flush with cash due to stimulus checks and reduced costs driven by working remotely, consumers spent their money.  Consumers also looked for ways to entertain their family and friends at home.  Of the industries that experienced high demand during the 2020 to 2022 period, many are now experiencing reduced sales levels. 

Examples of Retail Impacts

For example, Traeger reports last quarter’s grill sales were $76.8 million compared to $156.1 million during the same period in 2021. 

The upgrade cycle for ski equipment was reset on a large scale during the pandemic. The consumer typically replaces skis after 100 – 150 days of use or between five and eight years but the post-COVID surge in ski sales had the result of borrowing demand from future years. 


Examples of Manufacturing Impacts

Manufacturers are seeing orders being pushed out.  Michigan State’s supply chain chair, Jason Miller, used Census data to compile statistics showing that 69% of US manufacturers cited insufficient orders for operating below full production.  This compares to 50% during the pandemic lows.


The graph below shows the share of US and EU manufacturers citing demand for limiting output.



The Dallas Fed’s monthly manufacturing survey can be found at this link: ( 


In the comments section of the survey a Texas-based machinery maker was cited as responding “Orders are hard to come by, layoffs have been made, and the future really doesn’t look that encouraging.  Our sales team is flipping every rock, our "creative" team is looking far and wide for new ideas, and our operations team is squeezing out every penny they can.”


In the same survey a respondent in the fabricated metal manufacturing industry stated, “We have a good backlog, but owners have slowed down their approvals of projects and start dates for the projects we have purchase orders for.”


What can lenders do?

Lenders will need to continue to increase scrutiny of borrowers in these two sectors.  The impacts of consumer demand changes, inflationary pressures, and higher interest rates are negatively impacting borrowers. 


Tracking open orders, quoting volume, backlog, recurring orders, and other similar key performance indicator (KPI) performance could provide early warning of problems or could prove out existing concerns.


Inventory analysis including aging inventory by SKUs, evaluating sales turnover by SKU, and model year analysis could be helpful in identifying risk.


Lenders are also increasing frequency of field exams and appraisals.


The economy is struggling with inflation and interest rates, and as of today, relief on interest rates is not expected to be significant in 2024.  Inflation is hopefully reducing year over year, however, inflation from 2019 to 2024 is in the 25% to 30% range depending on the expense category being analyzed.  That level of price increases has been difficult for consumers and businesses to absorb into financial performance.



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