Most of the growth came from inventory build-up. GDP measures what is produced. If goods are produced but not purchased, inventories accumulate, so GDP can look strong even though spending is weak. Subtracting off inventories, real final sales were only up at a 1.4% annual rate in the third quarter.
Says James Hamilton.
The chart shows a big build up in inventory, not seen in previous quarters. He also mentioned that increases government spending accounted for .6 points of that growth number.
Can we sell the inventory at a profit? We shall see.
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