The shelves of department stores and warehouses could hold the key to the economy. Though the dour February jobs report pushed more economists...

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The shelves of department stores and warehouses could hold the key to the economy. Though the dour February jobs report pushed more economists to say a recession is here, or near, inventory levels for wholesalers and retailers in comparison to sales are below 10-year averages.

Empty shelves bode well for the economy, as inventory pileups have historically caused businesses to get skittish and slow their orders, says JPMorgan strategist Thomas Lee. The government will report on retailers’ inventory-to-sales levels for January today.

Barrington Research Associates’ Alexander Paris says inventories are still in fairly good shape for this stage of the economic cycle, while Lehman Brothers retail analyst Jeff Black says he’s encouraged that inventory remains better-managed than in previous cycles. In congressional testimony Feb. 27, Fed Chairman Ben Bernanke said he was encouraged that “we see few signs of any serious imbalances in business inventories.”

Ian Shepherdson, an economist for High Frequency Economics, worries that inventories for one subsector of the economy may be rising at an alarming rate: durable goods, which include washing machines, furniture and other manufactured items expected to last at least three years.

For durables, excluding automobiles and semiconductors, the inventory-to-sales ratio has risen as much in the past two years as it did before the recession of 2001, Shepherdson says. “With consumption apparently rolling over and global growth moderating, manufacturers are now running a substantial risk that they will suddenly find themselves with rather too much inventory.”