Inventory bounce

The Times is reporting that economists are optimistic as "manufacturing was at its most buoyant for two years". However, there is a note of caution later in the article as manufacturers ponder whether growth will continue. And this is a theme in an article by Paul Krugman in the New York Times, "When the economy slumps, companies typically find themselves with large stocks of unsold goods. To work off their excess inventories, they slash production; once the excess has been disposed of, they raise production again, which shows up as a burst of growth in G.D.P. Unfortunately, growth caused by an inventory bounce is a one-shot affair unless underlying sources of demand, such as consumer spending and long-term investment, pick up."

We are not out of the recession and won't be for a while.