Thursday, January 14, 2010

On the Retail Inventory "Bounce"

Reuters reports on the "surprise":

U.S. business inventories rose more than expected in November, according to a government report on Thursday, supporting views of a pick-up in the economic growth pace during the fourth quarter.

The Commerce Department said inventories increased 0.4 percent after gaining 0.4 percent in October, previously reported as a 0.2 percent rise.

Economists polled by Reuters had expected a 0.2 percent rise in November. The rebuilding of inventories following a period of aggressive liquidation is among the factors expected to drive the economy's growth as it recovers from the most severe downturn since the 1930s.
As can be seen below, the "rebuild" was driven completely by wholesale trade.

And as EconomPic readers know, the build in wholesale was completely built by farm products (which was not "real" growth, but instead a reflection of the spike in the price of corn and hogs).

Does anyone do actual research anymore?

Source: Census