Blog LeGianT

"If I have seen further it is only by standing on the shoulders of giants." – Sir Isaac Newton

  • LeGianT

  • Hồ Chí Minh

  • Meta

  • Recent Posts

  • Recent Comments

    Gordon Finchman on Credit Crisis Indicators…
    brunette teenage gir… on Vietnam Balance of Payment…
    Futures Galleria on Visualizing Vietnam Economy…
    hong on Smartphone Industry and Apple…
    current account on Vietnam current account…
  • Blog Stats

    • 22,222 hits
  • Quotes

    "Talent is God-given: be humble. Fame is man-given: be grateful. Conceit is self-given: be careful." John Wooden

    "If you can't predict the future, then you need a system that can handle breakdown" John M. Keynes

    "The birth of economics as a discipline is usually credited by Adam Smith, who published "The Wealth of Nations" in 1776. Over the next 160 years an extensive body of economic theory was developed, whose central message was: Trust the Market." _ Paul Krugman
    "One fear is that foreign investors will stop buying U.S. debt, just as Washington needs to borrow more. Such a turn could lead to a dollar collapse, causing spikes in long-term rates and inflation. The less the U.S. need to borrow from abroad, the less downward pressure on the dollar - and the greater the balance in the global economy." _ James C. Cooper
    “Nếu ai cũng sợ chụp mũ, nếu chỉ có một trung tâm độc quyền phát ra chân lý, nếu cấp dưới chưa có thói quen tranh luận với cấp trên, không dám suy nghĩ bằng cái đầu của mình vì sợ mất đầu, thì tình trạng lạc hậu về nhận thức lý luận ở nước ta sẽ còn kéo dài”_ GS. TS. Dương Phú Hiệp
    “Vì dân, cứ nghĩ làm thế nào để vì dân thì sẽ biết cách làm việc, biết cách sống"

    "Đất đai rừng biển của ta
    Tự cường dân chủ ắt là tiến mau
    Quyết trừ tham nhũng làm đầu
    Nghiêm trị những kẻ cường hào nhiễu dân
    Chỉnh Đảng trong sạch rất cần
    Nghe nhiều bớt cấm thì dân đồng lòng
    Tăng kinh tế, tăng quốc phòng
    Dân mà tâm phục thì không sợ gì…"_ tướng Nguyễn Trọng Vĩnh
    “Học thuyết của Khổng Tử có ưu điểm là sự tu dưỡng đạo đức cá nhân. Tôn giáo Giê-su có ưu điểm là lòng nhân ái cao cả. Chủ nghĩa Marx có ưu điểm là phương pháp làm việc biện chứng. Chủ nghĩa Tôn Dật Tiên có ưu điểm là chính sách thích hợp với điều kiện nước ta… Khổng Tử, Giê-su, Marx, Tôn Dật Tiên, chẳng đã có những điểm chung đó sao? Họ đều muốn mưu cầu hạnh phúc cho loài người, mưu phúc lợi cho xã hội. Nếu hôm nay họ còn sống trên đời này, nếu họ họp lại một chỗ, tôi tin rằng họ nhất định chung sống với nhau rất hoàn mỹ như những người bạn thiết. Tôi cố gắng làm người học trò nhỏ của các vị ấy”_ Hồ Chí Minh
  • Advertisements

Key to Recovery: Restocking All Those Shelves – BusinessWeek

Posted by LeGianT on April 19, 2010

Key to Recovery: Restocking All Those Shelves – BusinessWeek

With employment weak and credit tight, worries persist about the possibility of a double-dip recession. But inventory rebuilding should help keep the economy strengthening

What indicator is former Federal Reserve Chairman Alan Greenspan following most closely these days? No, it’s not consumption, business investment, or even the jobs market. It’s inventories. “That’s a peculiar thing to say,” the 84-year-old economist admitted in a Bloomberg Television interview on Mar. 26. But “inventories are critical now.”

Companies slashed stockpiles by a record amount last year as demand for their products nosedived. That aggressive de-stocking aggravated the downturn and helped make the decline the deepest since the 1930s. In fact, corporate shedding of inventories accounted for almost a third of the 2.4% contraction in the American economy last year.

Now, with the economy showing signs of recovering and sales picking up, the reverse dynamic is about to set in. Companies from luxury retailer Tiffany (TIF) to Home Depot (HD) are starting to restock their shelves. That should give a fillip to U.S. growth and help keep the recovery on track throughout the year.

The shift is already affecting the economy’s bottom line. More than two-thirds of the 5.6% annualized growth of gross domestic product in the fourth quarter of last year came from inventories, the biggest kick from that source since 1987.

And there’s more to come. David Hensley, an economist at JPMorgan Chase (JPM) in New York, says inventories will boost gross domestic product in the first three quarters of this year as well, though not to the same degree as in the final three months of 2009. Manufacturing companies added to stockpiles in March for the first time in almost four years, according to a survey of purchasing managers by the Institute for Supply Management. Ten of 13 industries, including clothing makers and computer producers, reported higher inventories.

Companies are restocking because they’re finding themselves short of product as sales strengthen. The ratio of business inventories to sales was 1.27 in February, just above a 29-year low of 1.24 set in 2006 and down from a recession high of 1.46 in January 2009. The ratio averaged 1.3 in the last economic expansion, from 2001 to 2007.

Businesses are also adding to their supplies because it’s taking longer to get the materials they need to run their plants. Manufacturers reported that deliveries from suppliers slowed in March, according to an index compiled by ISM. The index rose to a more than five-year high of 64.9 last month from 61.1 in February. The higher the index, the more widespread is the slowdown in deliveries.

The turn of the inventory cycle isn’t just occurring in the U.S. Companies in Europe and Asia also have been surprised by the recent strength of their sales, according to Hensley, and are starting to add to their stockpiles.

Such restocking will not only boost GDP in the U.S. and elsewhere but also spur hiring as manufacturers ramp up production to meet increased demand. Manufacturing payrolls in the U.S. rose in March for the third consecutive month, something that hasn’t happened since 2006.

The danger, of course, is that sales won’t increase as much as companies expect, leaving them with more workers and inventory than they need and raising the risk of a relapse in the economy later this year. That’s one reason the committee at the National Bureau of Economic Research responsible for determining when recessions begin and end cautions that it’s premature to declare an end to the current slump.

Indeed, Martin Feldstein, a Harvard University professor and NBER committee member, still sees a “significant risk” of a double-dip recession. “The consumer is going to have a very hard time,” he said. “Unemployment remains an enormous problem.”

Greenspan is not nearly so pessimistic. He says the odds that the U.S. will tumble back into recession “have fallen very significantly in the last two months” and forecasts a “self-reinforcing” cycle of industry replenishment that will carry the economy forward. For now, that seems the better bet.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: