Regarding securities financing transactions: In an environment of ample liquidity, securities financing transactions can obviously contribute to a procyclical build-up of leverage in the financial system.
A slowing in the rate of inventory liquidation will induce a rise in industrial production if demand for those products is stable or is falling only moderately. That rise in production will, other things being equal, increase household income and spending. The runoff of inventories, even apart from the large reduction in motor vehicle stocks, remained sizable in the fourth quarter.