U.S. Wholesales: A Plus for Sustainable Economic Growth?

inventoryInvestors in the U.S. stock markets look to the Commerce Department’s report on wholesale trade to give them a look below the surface of the visible consumer economy, especially as activity at the wholesale level can be a precursor for consumer trends. In particular, by looking at the ratio of inventories to sales, investors can analyze whether production will grow in coming months.

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While consumer confidence has indicated that that Americans still have confidence that the economic recovery will continue to chug forward at a modest pace, consumer spending — a component that comprises about 70 percent of the U.S. gross domestic product — has been on somewhat rocky ground as of late. Over the past few weeks, both the International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index and Redbook’s weekly measure of sales at chain stores, discounters, and department stores have etched out only slight gains or dropped. However, Tuesday’s wholesale report showed signs that steady and sustainable economic growth will increase in coming months…

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