Delivering for Best-in-Class Wholesaler-Distributors

This article is written by Alan Beaulieu, NAW Senior Economic Advisor, and President of ITR Economics. Data in this article is accurate as of April 2021.

Looking Good … Mostly.

Total Wholesale Distribution ended 2020 on a positive note: $5.824 trillion worth of goods were distributed over the course of the year, down 4.3% from 2019’s lofty $6.088 trillion. The Revenue 12-month moving total (12MMT) rallied late in the year and is rising off an October 2020 low. Year-end 2020 Total Wholesale Trade Distribution Revenue is 27.1% of US GDP, down slightly from 28.0% in 2019. The US Wholesale Trade Employment 12-month moving average (12MMA) in December 2020 was at 5.641 million jobs, the lowest level in just over seven years and down 247,717 jobs from year-end 2019. Employment in the industry initiated a rising trend on a 3MMA basis off a June 2020 low, with 85,233 jobs coming back in the second half of 2020.

Wholesaler-distributors, in general, are undoubtedly pleased with the sharp rebound in activity in the second half of 2020 following the pandemic-induced shutdown of the economy from March to June. Total Wholesale Distribution fell $145 billion in that four-month period, but the sharp increases in the third and fourth quarters of 2020 more than made up for the drop. The December 2020 3MMT climbed to $1.573 trillion, the highest since the October 2018 record high.

Wholesale Distribution of Nondurable Goods Excluding Petroleum ended 2020 strong at $2.454 trillion (12MMT), which was just shy of the March 2020 record high of $2.461 trillion. Nondurable Goods will quickly establish record levels of activity as we progress through 2021. Consumers are in an exceptionally strong position, and the inherent demand will fuel growth in this segment of the industry. Participants need to plan on having sufficient inventory, personnel, and internal systems to meet the need.

The oil and gas industry, including the Wholesale Trade of Petroleum and Petroleum Products, had a difficult year, with 2020 coming in at $519.9 billion, which is the lowest in four years and 29.0% below 2019. There are internal indications of cyclical improvement in 2021, including a steeper-than-typical third-quarter-to-fourth-quarter rise in the 3MMT. In addition, global demand is exceeding supply, and the US economy is in a strong recovery. NAW members in wholesale distribution of petroleum products should plan on increased activity in 2021 and into 2022.

Exhibit 1 is a status update on various segments of the wholesale distribution industry. The 12MMT values are as of January 2021. Notes pertaining to each line item are presented below the table. A Phase D designation means ongoing cyclical decline. Phase A means the cyclical momentum has shifted to a rising trend but that results are still below the year-ago level. Phase B is the best part of the business cycle in that it signals accelerating rise in the 12MMT. Phase C indicates decelerating rise in the 12MMT.

Grocery and Related Products

The 12/12 is at its lowest in 10 years. The 3/12 is slightly negative, but it is signaling a positive shift in the cyclical momentum. Consumers are spending, and the demand pull on this industry is expected to be healthy as we move through the year.

Electrical and Electronic Goods

The 3/12 is moving above the 12/12, signaling more cyclical rise for Electrical and Electronic Goods through at least the near term. The macroeconomic outlook portends rise through the year.

Professional and Commercial Equipment

The positive cyclical momentum has lifted the 12MMT to a record high, and the general economic outlook is signaling ongoing growth through 2021.

Motor Vehicles, Parts, and Supplies

Cyclical rise is occurring in this hard-hit industry. The 12MMT is rising, but there is a lot of ground to make up, as the 12MMT is $31 billion below the February 2020 record high. The good news is that the 3MMT ended 2020 at a record high and the rates-of-change are indicative of more cyclical rise ahead.

Lumber and Other Construction Materials

Lumber and Other Construction Materials are soaring. The 12MMT is a record high, the 3MMT seasonal decline is the mildest on record, and the 3/12, at 19.4%, is at its highest in over 15 years. Both prices and demand are very strong in the first half of the year. We are projecting that a decelerating rate of rise will characterize this industry segment later this year and into 2022.

Metals and Minerals (Excluding Petroleum)

Cyclical rise is occurring in the rates-of-change and in the 3MMT and 12MMT trends. Internal and external signals portend ongoing recovery in 2021. This industry moved into recession off a February 2019 high (12MMT basis), long before COVID-19, but has begun a recovery after experiencing the second longest and second steepest recession in 25 years. Wholesaler-distributors should plan for ongoing recovery in 2021 and into 2022.

Beer, Wine, Distilled Alcoholic Beverages

The Phase C designation means that growth in the 12MMT will be slowing, but the 12MMT will continue to establish record highs. The 7.9% 12-month growth rate (12/12) is down slightly from the November 2020 8.0% growth rate, which was the highest this industry has seen in 20 years. It is an unsustainable rate of growth, but there is still a lot of demand and earnings potential ahead.

Machinery, Equipment, and Supplies

The 12MMT is in a rising trend with a lot of ground to make up to surpass the May 2019 record high of $473.95 billion. The 3/12, currently at 3.7%, is rising and in Phase B. The 3/12, in conjunction with leading indicators and our macro outlook, is signaling ongoing recovery for wholesaler-distributors of machinery, equipment, and supplies.

Drugs and Druggists’ Sundries

The 12/12 is around the highest amplitude in the last four years, and the 12MMT has been establishing record highs for the past seven months after a brief interruption caused by the economic shutdown last year. Industry participants are well versed in planning for continued growth, and 2021 will not be an exception. Plan on slowing growth later this year, as this pace of growth is not sustainable.

Chemicals and Allied Products

The 12MMT is at a four-year low, but the 3MMT posted impressive gains in the third and fourth quarters of 2020. The rates-of-change and leading indicators are indicating that the 3MMT and the 12MMT will move higher in 2021 and into 2022.


Businesses are moving forward with confidence. Exhibit 2 shows a strong relationship between the Total Wholesale Distribution 12/12 and the US Business Confidence Index 3/12. The Confidence Index 3/12 typically leads the industry 12/12 through highs or lows by 10 months. The rise in the green line bodes very well for cyclical rise in the wholesale distribution industry in 2021. The US Business Confidence Index 3/12 has begun to edge lower off a 10-year high. The timing of that tentative high generally supports our outlook of deceleration in the wholesale industry rate of rise in 2022.

Exhibit 3 compares the Total Wholesale Distribution 12/12 to the US Capital Goods New Orders 3/12. In essence, we are looking at confidence in action. New Orders’ lead time is five months, half that of the US Business Confidence Index, but the relationship is unmistakable in that the New Orders trend is signaling cyclical rise for the wholesale distribution industry in 2021.


2021 and 2022 will be good years for the US economy and therefore good years for NAW members who are positively correlated to the economy. The leading indicators on both a macroeconomic and industry basis are clear: it is time for most NAW members to be planning for sufficient cash, inventory, and people to meet the demand. This key industry saw the nation through the COVID-19 crisis, and this industry will feed the economic growth of this year and next.


This article is written by Alan Beaulieu, NAW Senior Economic Advisor, and President of ITR Economics. For more information, call (603) 796-2500 or visit