Wholesale Inventories Decline, Sales Rise
The U.S. Commerce Department reported that
wholesale inventories fell 1.3 percent in August
for a record 12th consecutive month, evidence
that companies are trimming orders to factories,
which helped depress economic output during
the recession. Economists hope that the rising
sales will encourage businesses to begin restocking their inventories, which would boost factory
production and help bolster broad economic
growth in coming months.
Source: The New York Times , October 8, 2009
Explain why a fall in inventories is associated
with recession and a restocking of inventories
might bolster economic growth.
The Multiplier