Real Inventory Slowdowns
![](https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2019/11/6a01348793456c970c0240a4c68bb0200d-500wi.jpg?w=500)
Inventory investment plays a central role in business cycle fluctuations. This post examines whether inventory investment amplifies or dampens economic fluctuations following a tightening in financial conditions. We find evidence supporting an amplification mechanism. This analysis suggests that inventory accumulation will be a drag on economic activity this year but provide a boost in 2020.