A large portion of the 4.1% annualized growth in US third quarter GDP was due to inventory building, what does that mean?
Oftentimes, inventory builds create temporary growth that is unwound in the next quarter or two. Deutche Bank economists think this time is different.
They have been watching production surveys for a sign of a slowdown and don’t see it. Instead, they think the rise in Q3 could be a move towards normalizing inventory levels for a more normal economy as businesses gain confidence.
Looking ahead, watch production and manufacturing surveys to get a sense of whether this theory will prove correct.