U.S. Economy: Production, Prices Increase Less Than Forecast
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Industrial production and wholesale prices in the U.S. rose less than forecast in October, giving the Federal Reserve more reason to keep interest rates near a record low for an “extended period.”
Total output rose 0.1 percent, restrained by the first decrease in manufacturing in four months, a report from the Fed showed today in Washington. Prices paid to factories, farmers and other producers rose 0.3 percent after dropping 0.6 percent in September, the Labor Department reported.
The reports show why Chairman Ben S. Bernanke and his colleagues at the Fed are focusing on unemployment and capacity use to determine when to remove the trillions of dollars pumped into the financial system. A jobless rate at a 26-year high and industries using 70.7 percent of potential, near June’s record low, will probably limit inflation and keep monetary policy unchanged well into 2010.
“The recovery is still in the early stages and the data are going to be pretty choppy,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “The Fed will most likely see this path as one of subdued inflation and will want to keep an emphasis on sustaining the recovery.”