Inventories and Trade, the Stories Behind Rise in GDP

By October 29, 2009General

Good coverage of today’s news of the 3.5 percent rise in third quarter GDP in The New York Times, “U.S. Economy Began to Grow Again in the Third Quarter.” NAM board member Sandra Westlund-Deenihan comments:

A slower drawdown in inventories was one bright spot in Thursday’s report, as it indicated that businesses have largely sold out their current stock and may rev up orders in the coming months to replenish supplies.

“Everybody had been dealing with a just-in-time status quo,” said Sandra Westlund-Deenihan, president and design engineer for Quality Float Works, a plant in Schaumburg, Ill., that manufactures metal float balls and valve assemblies. “They were living off inventories they’d built up over the last several years. Now they’ve drawn that down and reached a point where they may have to have it ready and back on the shelf again.”

Like many American manufacturers, Ms. Westlund-Deenihan says that international business has helped keep her company afloat. United States exports over all grew at an annual rate of 14.7 percent in the third quarter, while imports grew 16.4 percent.

See also commentary by Dave Huether, NAM chief economist.

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