WASHINGTON — So much for fears that flooding the economy with money to fight the financial crisis would ignite inflation. The recession is keeping a tight lid on prices and wages.
Consumer prices have fallen over the past year at the fastest clip in more than a half-century, including an unexpected drop in March. Economists see little sign that inflation will be a problem anytime soon.
Adding to evidence of the economy’s weakness, the Federal Reserve said Wednesday that production at the nation’s factories, mines and utilities fell in March for the fifth month in a row, and faster than analysts predicted.
There was some good news: A series of Fed snapshots from around the country found a few faint signs that the steep plunge in economic activity that began last fall is beginning to level off.
For example, the report said that while home prices and construction are still declining in most of the country, the number of people shopping for homes has begun to rise, leading to a scattered pickup in some places.
Wall Street, which in recent weeks has rallied on hopes the recession might be easing its stranglehold, rallied in the final hour of trading. The Dow Jones industrial average finished 109 points higher at 8,029.
Consumer prices dropped 0.1 percent for March, the Labor Department said. Over the past 12 months, consumer prices have dropped 0.4 percent — the first 12-month decline since 1955.
Economists seem to think the United States has entered a period of sustained low inflation. Some economists said prices may keep declining slightly this year — though not enough to trigger a dangerous bout of deflation.
by the associated press
Consumer prices have fallen over the past year at the fastest clip in more than a half-century, including an unexpected drop in March. Economists see little sign that inflation will be a problem anytime soon.
Adding to evidence of the economy’s weakness, the Federal Reserve said Wednesday that production at the nation’s factories, mines and utilities fell in March for the fifth month in a row, and faster than analysts predicted.
There was some good news: A series of Fed snapshots from around the country found a few faint signs that the steep plunge in economic activity that began last fall is beginning to level off.
For example, the report said that while home prices and construction are still declining in most of the country, the number of people shopping for homes has begun to rise, leading to a scattered pickup in some places.
Wall Street, which in recent weeks has rallied on hopes the recession might be easing its stranglehold, rallied in the final hour of trading. The Dow Jones industrial average finished 109 points higher at 8,029.
Consumer prices dropped 0.1 percent for March, the Labor Department said. Over the past 12 months, consumer prices have dropped 0.4 percent — the first 12-month decline since 1955.
Economists seem to think the United States has entered a period of sustained low inflation. Some economists said prices may keep declining slightly this year — though not enough to trigger a dangerous bout of deflation.
by the associated press
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