We have recently learned about some leading economic indicators, which are variables that tend to fluctuate prior to the overall economy. While several economists are still quite pessimistic about this year economic prospect, it is interesting to see that these indicators, as being pointed out in the article, all indicate that our economy is experiencing strong recovery.
Inventories at U.S. wholesalers rose in February, a sign companies are ramping up orders as sales climbed to the highest level in more than a year. Sales increased by 0.8 percent, the eleventh consecutive rise. Many recent reports suggest that the replenishment of depleted stockpiles will lift production in the coming months. Moreover, stock prices rose on the mounting sign of economic expansion that began in mid-2009 will be sustained.
According to what we learnt in class, inventories influence the actual output. When firms run down their inventories, they will have the incentive to increase their production. Therefore, a drop in inventory indicates a better future for our economy.
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