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Inventories, Imports, and Output

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Substantial inventory accumulation and a surge in imports have accompanied the strong GDP growth of the last two years. Throughout this period, some analysts have warned that the inventory buildup signals a substantial slowdown in output growth—perhaps even a recession—as firms respond to a perceived inventory “overhang” by cutting back production. Other commentators have suggested that if the buildup is largely composed of imported goods, then the implications for future output growth may be less dire, since a smaller overhang would exist for domestic firms.

Suggested citation: “Inventories, Imports, and Output,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-09, pp. 13, 09.01.1998.

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