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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Wholesale inventories tick up unexpectedly in October

Wholesale inventories rose three-tenths of 1 percent in October, the government said moments ago, a higher-than-expected tick upward.

Forecasters expected wholesale inventories to drop about three-tenths of 1 percent.

This means that wholesalers -- who sell products to retail stores you shop at -- started restocking their shelves in October after letting them empty during the recession.

In the short term, this will have an impact on GDP, because factories are cranking up products to stock the shelves of wholesalers. If wholesale inventories rise in November and December, they will contribute to fourth-quarter GDP growth.

However, if wholesale inventories tick up too quickly following a recession, and consumers don't respond by buying the product, that forces wholesalers to stop ordering from factories, which leads factories to idle production lines and then you've got your whole negative-feedback loop going.

-- Frank Ahrens
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By Frank Ahrens  |  December 9, 2009; 10:12 AM ET
Categories:  The Ticker  | Tags: manufacturing, wholesale inventories  
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