GNP Declines; Inflation Rate Plunges to 6%.: GNP Falls 1.9% in Quarter
The nation's output of goods and services, squeezed by persistently high interest rates, fell at a 1.9 percent seasonally adjusted annual rate in the second quarter, the Commerce Department reported yesterday. -.; 1</br></br>The inflation rate also dropped sharply from a 9.8 percent annual rate in the first quarter to only 6 percent-in the second, the department said. Food and energy prices rose much less rapidly than in the first quarter. With economic activity essentially flat since January and the high level of interest rates helping to push down many sensitive commodity prices, the rate of inflation as mea.-sured by the GNP deflator was at its lowest level in three years.</br></br>- Most forecasters, including those in the Reagan administration, expect no pickup in the economy until late this year or early in 1982, and some believe the second quarter was the opening phase of what would be the nationÛªs second recession in two years.</br></br>In updating its forecast last week in connection with the midyear budget review, the administration declared, ÛÏLittle or no real output growth is expected during the remainder of the year.Û</br></br>Also as part of that forecast, the Reagan economists predicted that the unemployment rate, which was -7.3 percent in June, would average 7.7 percent in the fourth quarter.