Essay about Why Stronger Summer Gdp Is Horrible News
• J.P. Morgan Chase and Barclays economists uped their estimates to 3.1%.
• Pierpont Securities economist Stephen Stanley put the growth rate at 3%.
• Macroeconomic Advisers had their tracking estimate at an enormous 3.3%
At a 3% pace, this GDP growth would be the fastest since the …show more content…
“When it comes to inventories, what goes up must come down,” Mr. Stanley said in a note to clients. “If inventories merely return to a more normal pace of increase, it will cut GDP growth by a full percentage point” in the fourth quarter. That would push fourth-quarter GDP to a flat performance.
Mr. Stanley added if companies lighten their stocks in the final three months of 2013, “then a negative [fourth quarter] is going to be very difficult to avoid.”
J.P. Morgan now forecasts fourth-quarter GDP growth at a 1.5% rate, closer to many other economists’ estimates.
This article came of interest to me since we’ve spent a lot of time discussing GDP and how it affects the economy. When I saw that firms will have less incentive to order more goods from factories in the fourth quarter unless sales pick up significantly, I immediately thought of my father’s steel and wire company. My dad is the Director of Quality and Product Management for the company and overseas all product orders. Their sales directly correlate with the growth of GDP and they have already cut back on ordering some of their inventory since the companies they sell to have over-stocked recently.
Many companies will be affected by this recent discovery, and if companies don’t realize this and don’t lighten their stocks, then we are in for a negative fourth