Economic Recovery Gains Strength
Production Is on the Mend, Consumer Prices Rise 0.3% And Jobless Claims Decline
By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- Generally positive signals on industrial production, inflation and employment indicate the U.S. economy's recovery is gathering strength.
In one of several government reports issued Thursday, the Federal Reserve said industrial production rose a solid 0.4% in September, a turnaround from a drop of 0.1% in August.
The consumer-price index increased 0.3% in September, largely because of higher prices at the gasoline pump, the Labor Department reported. But excluding food and energy prices, inflation rose only 0.1%, suggesting that the downward pressure on prices is still a concern for the Fed. Prices are up a modest 1.2% year to year, a 37-year low.
Low inflation likely means the key short-term interest rate will be kept at 1% when the Fed meets next, on Oct. 28.
In addition, new claims for unemployment benefits fell by 4,000 last week to a seasonally adjusted 384,000, the Labor Department said. The less volatile four-week moving average, which smooths out weekly fluctuations, fell by 4,250 to 390,750, the lowest level since early February.
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