A Special Background Report On Trends in Industry And Finance
INVENTORY BUILDUP has economists worrying about recession.</br></br>The ratio of retail inventories to sales "has rocketed in the last few months" to a 20-year high, says Norman Robertson, chief economist of Mellon Bank, Pittsburgh. Commerce Department figures show business inventories grew at a $58.3 billion annual rate in the fourth quarter. That could reflect retailer stockpiling of imported goods or the increased difficulty of selling imports at higher prices. But many economists fear that the buildup comes from slowing consumer spending and that recession and layoffs will follow.</br></br>Confusing the picture is the healthy level of manufacturing inventories. A lower dollar is boosting exports and helping the industrial sector, says Gregory Gieber of Smith Barney, Harris Upham & Co. He thinks this will "offset the weakness of the consumer sector." But H. Erich Heinemann, chief economist at Ladenburg, Thalmann & Co., says exports can't absorb enough of what the U.S. is producing. "We are pumping out a lot of goods that no one is going to buy."</br></br>The recession will be a mild one, says Mr. Heinemann, predicting a recovery beginning by the third quarter.</br></br>SHORTS AND CULOTTES offer women hemline alternatives this spring.