Industrial Production Craters, Jobless Claims High...But Low Inflation!

Some good news this morning, finally: headline CPI flat, core up only 0.1%. So Fed can cut rates immediately to zero.

Meanwhile, industrial production dropped more than any time since 1974 (hurricanes and Boeing strike) and jobless claims were still well in recession territory.

WSJ: U.S. consumer prices were flat in September, a government report showed, the latest indication that falling energy prices and the economic downturn are rapidly easing pressure on inflation.

The figures, which included a slim gain in core prices excluding food and energy, should make it easier for Federal Reserve officials to lower official interest rates even further to address severe strains in financial markets.

Meanwhile, production by U.S. industries took its deepest plunge in nearly 34 years during September because of two hurricanes and labour unrest.

Separately, the number of U.S. workers filing new claims for unemployment benefits fell a second-straight time last week, a government report showed, as the effect of recent hurricanes continued to fade from the data. Still, the trend remains quite soft for labour markets as reflected by another rise in total claims lasting more than one week to their highest level in more than five years.

The consumer price index was unchanged in September, the labour Department said Thursday. It fell in August for the first time in almost two years. Excluding food and energy, the CPI advanced 0.1% last month. Both figures were 0.1 percentage point below Wall Street forecasts, according to a Dow Jones Newswires survey.


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