A Federal Reserve publication noted that “the shedding of unwanted inventories often accounts for a large portion of the decline in gross domestic product (GDP) during economic recessions.” What does...

A Federal Reserve publication noted that “the shedding

of unwanted inventories often accounts for a large portion of the decline in gross domestic product (GDP) during economic recessions.” What does the author mean

be “shedding of unwanted inventories”? What makes the

inventories unwanted? Why would shedding inventories

lead to a decline in GDP?

Source: Jeremy M. Piger, “Is the Business Cycle Still an Inventory

Cycle?” Economic Synopses, Federal Reserve Bank of St. Louis, No. 2,

2005.