Can We Rely on Inventory Cycle for Recovery?

I read a very interesting letter to editor by Professor Eileen Appelbaum today. She argued that we cannot rely on the inventory cycle to lead us to recovery. She argued in the past we may have been able to rely on inventory cycle because increased demand caused by public and private demand would increase output and employment but not this time:

Unfortunately, this time around, things are likely to be very different. The US no longer manufactures most of the goods it needs to replace liquidated inventories, so will need to turn to imports to restock its shelves. Any gains from a rebound in inventories will be largely offset by the negative effects on gross domestic product from an increase in imports.

Prof. Appelbaum believes that our large and unsustainable trade deficit will thwart any recovery. She raises a very interesting point and something that we may be overlooking. What do you think?

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EI's do not account for globalization

It's true. We have phantom GDP, that really should be attributed to other nations because U.S. firms are offshore outsourcing production.

We have a Stimulus, that violates the basic Keynesian theory....because the money is only supposed to go to U.S. citizens, domestic jobs in order to work...and the money is not tied to U.S. citizens, perms, domestic production only.

Thanks for the heads up. Maybe I(you) need to do an overview post on the various problems going on with traditional economic indicators in this light that experts have written about.

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I certainly believe the good professor

Can't have a recovery without jobs. Can't have jobs without domestic manufacturing.
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Executive compensation is inversely proportional to morality and ethics.

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Maximum jobs, not maximum profits.

We have our friends at

We have our friends at http://www.trilateral.org/pubs.htm
who began in the late 70s to thank for the fact that our manufacturing has been offshored.

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