人人有本用

February 27, 2009 | 1516 GMT


The U.S. Department of Commerce announced Feb. 27 that gross domestic product (GDP) contracted by 6.2 percent in the fourth quarter of 2008 on an annualized basis. This is a downward revision from the first estimate — released at the end of January — which rolled in at -3.8 percent. A final revision will be released on March 26. Obviously, a contraction of 6.2 percent is a horrid figure — the worst since the 1982 recession. But there are two very notable silver linings.

First, even with the negative revision growth for fourth quarter 2008, U.S. GDP growth for the year was still positive at 1.1 percent. That may seem like cold comfort as investment, employment and housing statistics are decidedly bearish, but even with everything as dour as it seems, the U.S. economy is still larger than it was in January 2008. Many countries around the world — industrial powerhouses Germany, the United Kingdom and Japan come immediately to mind — cannot say that.

Second and far more importantly, the February statistical release revealed that the inventory growth increased the fourth quarter’s GDP figures by 0.16 of a percentage point. The January release, in contrast, indicated an inventory increase of nearly ten times that amount. U.S. statistics typically view inventory builds as positive GDP activity because something of value was added.

However, inventory builds do not reflect actual growth — particularly during recessions — as they represent the accumulation of goods that no one wanted to purchase. Until inventories are trimmed back, there is little reason for firms to produce more goods, and the time it takes for consumers to use up excess inventories delays the onset of economic recovery. Therefore, the fact that inventories did not increase by nearly as much indicates that the United States is actually somewhat closer to a recovery than the January statistical release indicated.

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