US economy ground to a halt in third quarter

Net of inventory accumulation, real GDP for the third quarter was slightly negative, US government data released Thursday morning show. Real GDP grew at an annual rate of 2%, below the forecasters’ consensus of 2.6%, the Commerce Department reported. But a jump in inventories added 2.07 percentage points annualized to GDP. That’s more than the reported growth.

That’s a very odd number, considering that the inventory-to-sales ratio of US business stands at the lowest level on record, due to supply-chain constraints that prevent businesses from restocking. It’s likely that the inventory number was exaggerated. If that’s true, the US economy shrank during the third quarter.