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Economy Unsure of Where Its Heading

September inventory and sales figures are helping renew optimism in the economic recovery after August figures fed fears that the economy was entering another slump. August’s bad news was found in the miniscule 0.1 percent rise in business inventories. August’s tiny rise was the smallest in over a year. August sales also fueled skepticism with a drop of 0.5 percent. September’s numbers could bode well for the economy, showing an increase in business inventories of 0.3 percent, and no-change up or down in September sales.

Slow sales can make businesses more cautious about adding merchandise to their shelves, causing them to wait until sales pick up before re-stocking. Usually increased inventories are a reflection of optimism in the upward progress of the economy. Lowered inventories are a sign of worry about future sales. When lowered sales accompany increased inventories, it is a sign of involuntary inventory building: getting stuck with extra goods that will be hard to sell in the near future.

The government’s announcement of the August 0.3 percent increase in retail sales is a modest, but hopeful sign for the future. This and other signs, such as the sustained gains the country has seen in increased hiring and decreased unemployment, have fueled the present optimism about the economy and its future. The jobless rate hit its lowest value in over six years, down to a respectable 5.8 percent.

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