Inventories Point to Worse Economic Forecast

I've lowered my economic forecast for 2009 based on inventory data which I've recently studied.  Here's the long-run picture:


That trendline (in red) would head even lower if it were calculated without the latest data.  It looks to me like we'll have a $200+ billion inventory correction this year, as companies try to get their inventory-sales ratios back to normal.  What would help?  Getting the sales level up quickly, of course, but that's unlikely to happen.

It's not the end of the world, but in my forecast GDP growth is lower in all four quarters of 2009.  That makes Q2 virtually flat (just a little positive, though, if you believe the decimal places).  I still have modest GDP growth in the second half of 2009.