I may be too dumb to understand this but shouldn't the shutdown of economy result in an increase in inventories / sales ratio not decrease? If goods are not sold an remain in inventory, then inventory goes up, no? I'm pretty sure I miss something but I don't know what
Great question. So you can see in the chart that there was an initial spike during the lockdown. But as things remained locked down the inventory to sales ratio decreases a lot. This was because consumers primarily bought goods instead of services due to the lockdowns. You can see this dynamic by looking at the personal consumption data in the personal income and outlays data on the Fred website.
I may be too dumb to understand this but shouldn't the shutdown of economy result in an increase in inventories / sales ratio not decrease? If goods are not sold an remain in inventory, then inventory goes up, no? I'm pretty sure I miss something but I don't know what
Great question. So you can see in the chart that there was an initial spike during the lockdown. But as things remained locked down the inventory to sales ratio decreases a lot. This was because consumers primarily bought goods instead of services due to the lockdowns. You can see this dynamic by looking at the personal consumption data in the personal income and outlays data on the Fred website.