2009 GDP Declines 2.4%, Worst Year Since 1946
From The Daily Capitalist It all depends on how you wish to spin the numbers. Q4 2009 GDP increased 5.7% of which 3.4% was inventory reduction. Overall for 2009 GDP went down 2.4%. My guess is that the 5.7% number will be readjusted downward when the revised numbers come out in late March (26th). What does this mean? Inventory reduction is a business cycle phenomenon. When consumer demand shrinks, retailers draw down their inventory of goods before they re-order. They've been doing this for six quarters, the longest streak since 1948. Now businesses find their inventories too low and re-order goods. This has happened for the last 2 quarters. It reflects the fact that businesses have become lean and more efficient which is not a bad thing. But ... as David Rosenberg points out, it is usually accompanied by increases in consumer spending which is driven by wage and job growth:
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