STATE OF BUSINESS: The Inventory Drop

To U.S. businessmen, one of the prime reasons for the recession is the sharp dip in inventories. Last week the Commerce Department's figures showed just how sharp the cutbacks have been.

In the early part of 1957's fourth quarter, manufacturers shifted from increasing inventories at a $2.4 billion annual rate to cutting them at a $1.2 billion rate, thus producing an overall $3.6 billion production cut for the economy. Then the recession accelerated rapidly. In November and December, said Commerce, manufacturers chopped inventories more than $300 million each month, almost doubling the production cuts. Wholesalers cut orders so sharply that inventories...

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