Economic Fears Eased By Reports: Producer Prices Fall; Factory Output
Fears of a double dose of economic bad newsÛÓworsening inflation accompanied by a recession this fall-receded yesterday as the government reported a decline in a key barometer of prices, a pickup in production by the nationÛªs factories and an unexpected shrinkage of the trade deficit.</br></br>In the ongoing debate over the direction of the U.S. economy, analysts said the reports indicated that economic growth will continue in the months ahead and that a surge of inflation sparked by rising oil prices is disappearing.</br></br>The Federal Reserve had these goals when it began raising interest rates last year in an effort to slow economic growth in order to keep inflation from getting out of hand. President Bush and other key administration officials in recent weeks have signaled that they now want the Fed to lower interest rates to ÛÏThe numbers reinforce the feeling of a soft landing for the economy,Û said Samuel Kahan, chief economist for Kleinwort Benson Government Securities in Chicago. ÛÏNone of them suggest any acceleration either in economic activity or in inflationÛ but they also do not point toward recession, he said.</br></br>The Labor Department reported that falling energy prices were responsible for a 0.4 percent decline in See PRICES, D13, Coll</br></br>the overall index of prices charged by producers of goods ready for sale to ^he, public. After increasing sharply earlier this year, gasoline prices have dropped by nearly one-fourth in the past three months, pushing down the overall index each month. In a separate report, the Fed said production at factories, mines and utilities rose 0.3 percent in August, the strongest gain since April. The increase was due largely to stepped-up automobile and truck production and gpins in coal mining after thousands of striking miners returned to work.