Double%20Dip%20Risk%20Rises%20After%20Inventory%20Blowout

Double%20Dip%20Risk%20Rises%20After%20Inventory%20Blowout -...

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Double Dip Risk Rises After Inventory Blowout: Kevin Hassett Share Business Exchange Twitter Facebook | Email | Print | A A A Commentary by Kevin Hassett Feb. 1 (Bloomberg) -- When is quarterly gross domestic product growth of almost 6 percent bad news? When it looks like what was reported last week. U.S. GDP increased 5.7 percent at the end of last year, with more than half of that growth -- 3.4 percent -- attributable to changes in inventories. This astonishing impact of inventory has ample historical precedent, and the bottom line has terrible implications for 2010. Inventories are a remarkable corner of the economy. They are the goods and materials that companies keep on hand to make sure that their operations run smoothly. They are the boxes of food on shelves at the grocery store and the bins of metal parts sitting next to the assembly line in a manufacturing plant. Inventories were a big part of the story during the worst of this recession, and that is nothing new. In a landmark paper published in 1980, Princeton University economist Alan Blinder found that inventories, while accounting for less than 1 percentage point of national output, accounted for 37 percent of the fluctuations in output. Since Blinder’s paper came out, inventories have held onto their important role. Updating
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Double%20Dip%20Risk%20Rises%20After%20Inventory%20Blowout -...

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