The Bureau of Economic Analysis revised annualized GDP growth to 2 percent in the third quarter, down from 2.5 percent, largely based on a reduction in inventories. Instead of growing by $5.4 billion, inventories decreased by $8.5 billion.
The previous time that happened in the fourth quarter of 2009, hiring shifted into negative territory. When inventories are cut, jobs tend to follow. It’s also surprising because the holiday season is upon us, a time when companies boost inventories.
Yet it might not turn out so bad. Consumer demand is picking up, and companies may need to start hiring to keep up with increased sales. Despite weaker growth, employment may grow in the coming months.