Most economists agree that there will be no strong turnaround in the economy until business stops living from hand to mouth and starts building up its inventories again.
This week there were signs that the worst in inventory liquidation—which reached a phenomenal annual rate of $9 billion—may be over. The Commerce Department reported that while there was "no clear evidence that inventory liquidation is slowing," sales and production have steadied. The history of previous recessions shows that once sales steady, inventory liquidation comes to an end (see chart). Wholesale and retail sales moved ahead in...
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