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Why economists aren’t freaking out about the negative GDP numbers
What was remarkable in the analysis after data showed a 1% contraction in the U.S. economy during the first quarter was the lack of any real panic by economists. Yes, of course, there’s the weather — the unusually cold weather that dragged spending down, particularly in January. But it’s more than that. For instance, the new report shows a 1.6 percentage point drag from inventories. What really is so bad about companies having fewer items stocked away? “The pace of inventory-building has fallen by more than half since its Q3 peak, and is now below the rate needed to keep inventory-to-sales ratios steady,” ... (full story)
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