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Merchants finally restock, boosting GDP

John Dimsdale Jan 29, 2010

Merchants finally restock, boosting GDP

John Dimsdale Jan 29, 2010


KAI RYSSDAL: Take an economy that’s been stuck as long as ours has and almost any increase in growth is a good thing — 5.7 percent for the last quarter of 2009 is flat-out amazing. The best in six years. But… well… here’s John Dimsdale.

John Dimsdale: The Commerce Department says the biggest chunk of last quarter’s growth came from inventory replacement. Starting in 2008, retailers and wholesalers were too skittish about the economy to replenish their slowly emptying shelves. But by last summer, stockpiles had fallen enough to generate some replacement orders, so factories geared up.

David Malpass with Encima Global says shelves are full again, but customers aren’t buying yet.

David Malpass: People are worried about their jobs, holding back on their purchases. And so we won’t be able to keep growing at a 5 percent rate, because the goods and services would just pile up.

There is one part of last quarter’s growth that looks more sustainable.

David Huether: We’re seeing a real surge in exports.

David Huether, chief economist for the National Association of Manufacturers, says exports grew by 28 percent, thanks to orders from Europe and Asia.

Huether: And the global economy is picking up. The dollar is competitive, about 10 percent below its long term average, and we’re seeing the benefits of that.

Huether says that’s the strongest export growth in 30 years. Still, exports alone aren’t enough to improve the job picture any time soon.

Josh Bivens: The jobs hole is so deep we need about 10.5 million jobs just to get back to the pre-recession unemployment level.

Josh Bivens is with the Economic Policy Institute.

Bivens: It would take about four years of growth at 5.7 percent to get there.

Bivens says the economy won’t grow anywhere close to that without more government stimulus.

In Washington, I’m John Dimsdale for Marketplace.

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