WP: Production Grew, Prices Fell in July: Govt. Reports Indicate Rebound

[DeepModem Mom]

Production Grew, Prices Fell in July
Government Reports Indicate a Rebound

By Nell Henderson
Washington Post Staff Writer
Wednesday, August 18, 2004; Page E01

The nation's factories cranked out more products in July, miners dug more minerals and builders broke ground on more homes, the government said yesterday in three reports that showed some rebound in economic activity last month.

Meanwhile, falling prices for apparel, toys, gasoline and other items pulled down the Labor Department's consumer price index in July, confirming that inflation had retreated since spurting in the spring.

Together, the figures heartened those analysts who expect the economy to gain steam in coming months after its recent slowdown.

High oil prices in recent months "tapped a brake on momentum but didn't stop us from moving forward," said Diane Swonk, chief economist at Bank One Corp. "Instead of the car stalling out, we just slowed our speed a bit."

The economic figures did not change analysts' widespread expectation that the Fed will likely raise its benchmark short-term rate at least two more times before the end of the year, to 2 percent from its current 1.50 percent level. Fed policymakers expect the economy to keep gaining strength in coming months and think they must raise the benchmark rate to avoid fueling inflation....


http://www.washingtonpost.com/wp-dyn/articles/A9680-2004Aug17.html