Warehouses in China and the U.S. are stuffed with unsold televisions, refrigerators and sofas, a shared sign of diverging pandemic recoveries that could herald renewed pressure on global supply chains and shake up the selection of goods in American stores.

Merchandise is piling up for different reasons in each country.

In the U.S., consumers are spending more on in-person experiences like restaurant meals rather than on accumulating goods, as they did last year, a switch that left retail stockpiles at a record high.

Chinese inventories are rising due to the government’s “zero-COVID” policy, which depressed consumer spending in recent months while allowing factories to keep producing. Inventories of finished goods in April equaled more than 21 days of sales for the first time in at least 12 years, according to Capital Economics, a research consultancy.

Selling off mountains of goods will shape growth rates in the world’s two largest economies. Discounts required to clear warehouse space on both sides of the Pacific could offer American shoppers some retail bargains, though economists say any savings on leaf blowers and laptops will do little to reduce the 8.6% inflation rate.

The inventory tumult represents the latest chapter in the global economy’s stop-start performance since 2020.

“We really have a multispeed global economy today,” said Gregory Daco, chief economist at Ernst & Young. “There’s a timing mismatch and a demand mismatch between goods available and goods sold.”


The Chinese economy ground to a near-halt this spring during a lockdown of China’s commercial capital, Shanghai, and its 26 million residents, while the U.S. rebounded from a downbeat first quarter with consumers racing to resume their pre-pandemic lifestyles.

After more than two years of battling to get sufficient goods into the country, many U.S. companies suddenly have too much of some items and not enough of others. The disconnect between overflowing warehouses and changing consumer tastes reflects the challenge confronting many businesses, as the economy twists unpredictably.

The inventory pileup comes even as chronic shipping snarls are easing.

In April, U.S. imports fell $13 billion compared with March levels, meaning less demand for space aboard container ships. Since May 1, the cost of sending a standard container from China to the U.S. West Coast has fallen by 37%, according to the Freightos index. On June 10, only 20 cargo ships were waiting off the Southern California coast for a berth, down from a record 109 in January.

While there is little likelihood of a repeat of last year’s massive supply jams, the recent improvement may be fleeting. China relaxed its Shanghai lockdown at the beginning of June, which could produce a “ketchup effect” as the clogged port suddenly releases U.S.-bound vessels, according to Windward, a supply chain data firm.

The Port of Los Angeles also is bracing for an earlier-than-usual peak shipping season, as U.S. retailers switch gears to match orders for the back-to-school and holiday seasons with fast-changing consumer tastes.


“We expect congestion to go up again. We’re telling our clients. We’re getting prepared for that,” said Brian Bourke, chief growth officer for SEKO Logistics in Chicago.

The recent lockdowns all but immobilized major portions of China’s economy. Tens of millions of Chinese consumers were effectively trapped at home and local businesses were shuttered. Many factories, however, kept operating by having workers stay on-site 24/7 to minimize infection risks.

As the economy reopens, Chinese shoppers will begin whittling away at the accumulated goods. With the threat of renewed lockdowns creating uncertainty, consumer spending is likely to remain weak, said Mark Williams, chief Asia economist for Capital Economics.

That will increase the supply of consumer goods available for U.S. customers which could reduce export prices.

“The main impact of weakness in China is China is going to be a significantly disinflationary force for the rest of the world,” said Williams.

A glut of foreign-made products already may be contributing to lower prices on some goods in the U.S. But overall savings from discounted goods would probably be swamped by price increases on other goods, notably gasoline and rent, economists said.


After more than two years of chronic supply chain headaches, inventory management is now a central focus for retailers and industrial companies alike.

Mark Mathews, vice president for research development for the National Retail Federation, said record retail inventories of $696 billion remain low relative to sales.

Yet some retailers, burned last year by problems getting products through crowded West Coast ports, placed unusually heavy orders this year.

Indeed, Target is cutting prices on outdoor furniture and appliances to free up space on store aisles for travel-related products like luggage, while Walmart has rolled back prices on more than 10,000 items, including apparel.

But as U.S. retailers rush to cancel orders for goods that consumers no longer want, they are struggling to determine what products they should place on their shelves.

“The problem is the economy is moving quite quickly,” said David Page, head of macroeconomic research at AXA Investment Managers in London. “The longer lag between ordering and delivery means a greater chance of the economy turning — and the economy is turning.”


Industrial giants are also feeling the pressure. Over the past year, manufacturers’ inventories have increased by nearly 11%, nearly as much as retailers’ stockpiles.

The increase in industrial inventory stems from supply snags, not changing tastes. In many cases, factories have most of their needed parts on hand but can’t proceed with production for want of a critical component.

At tractor maker John Deere, “work in process” inventory soared to $1.6 billion from $967 million one year ago; that explains why retail outlets are running short of the Deere products they need.

Likewise, Eaton, which makes industrial goods including electronic components and lighting systems, reported $783 million in half-built products, up almost 50% from one year ago.

“If you’re missing one small component, you have a bunch of people standing around in factories, not able to complete assemblies,” said Craig Arnold, Eaton’s chief executive. “That drives fairly material inefficiencies in your operation.”

If there is a silver lining in the swelling industrial inventories, it is that they may cushion any recession. The partially finished construction equipment sitting on Deere’s lots, for example, will eventually be sold, once the missing parts show up.