Bottom line: Unsold goods weigh on future economic growth

By John W. Schoen, Senior Producer

The U.S. economy perked up late last year as hiring accelerated and factories ramped up production. Unfortunately, a lot of what those factories made is still sitting in warehouses and on store shelves.

That doesn’t bode well for growth in the coming months.  

At first blush, the numbers posted by the Commerce Department for gross domestic product in the last three months of 2011 looked strong. Overall growth advanced by 2.8 percent on an annual basis, a little weaker than economists had expected based on a series of other positive economic reports. That was much better than the 1.8 percent pace in the third quarter and the best showing since the second quarter of 2010.

But much of the fourth quarter growth came from businesses restocking inventories, which swelled by $56.0 billion, adding nearly 2 percentage points to GDP growth. The so-called ”final sales” number, which tracks how much was actually sold, rose a meager 0.8 percent. More >>