Basic question reg. reading of recent GDP data

Hi, I have read several pieces covering the latest advance GDP number, and it is reported everywhere that the primary cause of the strong number was: "In this case, the decrease in the rate of inventory liquidation accounts for a major boost to GDP"
Like here, for example: http://www.rationalwalk.com/?p=4695

Could someone with some very basic language explain how "the decrease in the rate of inventory liquidation accounts for a major boost to GDP"?

Thanks!

As the article points out, "Real GDP measures production, not final sales, so changes in inventories can often have a major influence on reported GDP numbers". This means, in part, larger inventories are seen as a sign of greater production.

In this case the author is pointing out that a decrease in the rate of inventory liquidation (creating larger relative inventories) is contributing to the apparent boost of the GDP. The key to understanding what he is saying lies in the last sentence of the next paragraph..."It appears that GDP growth in the first quarter may depend on whether companies decide to begin building inventories rather than only reducing the rate of inventory liquidation."

I hope that helps. If my interpretation is wrong I'm sure someone will be along shortly to correct my error.

Have a read, the accounting for inventories specifically FIFO..
http://en.wikipedia.org/wiki/Invento...IFO_accounting

And this..
http://en.wikipedia.org/wiki/Cash_conversion_cycle

hope this helps.