WORLD> America
|
WORLD> America
|
|
US October consumer prices, home starts plummet
(Agencies)
Updated: 2008-11-20 00:15 WASHINGTON - US consumer prices dropped at the fastest rate on record in October and new home construction was at a record low, according to government reports on Wednesday that underlined how rapidly the economy was weakening.
The Labor Department said its widely watched Consumer Price Index plummeted 1 percent, exceeding forecasts by Wall Street analysts for a 0.8 percent decline and the biggest drop since the department began monthly data in 1947. Core prices, which exclude food and energy items, declined 0.1 percent in contrast to the 0.1 percent advance that had been forecast.
Separately, the Commerce Department said new-home starts fell 4.5 percent last month to a seasonally adjusted annual rate of 791,000 units and building permits -- which signal future building intentions -- dropped 12 percent to 708,000. Many economists think the US economy already is in recession even though one has not yet been formally declared. A severe global credit crunch that has sapped demand for commodities and hurt consumers has already driven parts of Europe and Japan into recession. "It appears we are in a period of disinflation right now, where the actual level of inflation is trending lower," said Michael Sheldon, chief market strategist for RDM Financial, Westport, Connecticut. "The question is will the economy rebound enough with the benefit of a big stimulus plan in 2009 to prevent deflation and get consumers spending again." Federal Reserve Chairman Ben Bernanke told Congress on Tuesday that credit markets had eased somewhat after massive injections of credit and interest-rate cuts. But slumping home prices are expected to severely pressure consumers and depress demand for a prolonged period. US stock index futures stayed in negative territory after the latest negative economic data was released. The dollar pared losses against the yen, while longer-dated government debt held on to prices gains. The Labor Department said energy prices dropped 8.6 percent in October, after declines of 3.1 percent in August and 1.9 percent in September. October was the biggest drop since the department began keeping seasonally adjusted energy prices in 1957. Gasoline prices plunged 14.2 percent in October, also a record drop. Gasoline prices are expected to drop again in November, with the latest weekly government data showing retail gasoline at $2.13 a gallon, sharply below the $3.54 a gallon at the beginning of October. Food costs were up 0.3 percent in October, half the 0.6 percent rise posted in September. On a year-over-year basis, the Consumer Price Index rose 3.7 percent, the smallest increase in a year. |
|||||
