Lower Inventories Might Not Be Much Cause For Cheer

Some economists predict that the recent sharp drop in manufacturing inventories will spark a strong upturn in output. Charles Lieberman of Chemical Securities Inc., however, is skeptical. Lieberman points out that the decline in factory inventories in recent months--and years--has occurred entirely in stocks of raw materials and work in process. By contrast, inventories of unsold finished goods have increased to their highest level in the current business cycle and are plentiful at factory, wholesale, and retail levels.

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