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Economic equilibrium?

Consumer prices rose in February by the largest amount in seven months as gasoline prices surged again and clothing costs jumped the most in nearly two decades. The Labor Department reported Wednesday that consumer inflation rose 0.4 percent in February, the biggest one-month jump since a 0.7 percent rise in July. Core inflation, which excludes food and energy, rose 0.2 percent in February, slightly higher than the 0.1 percent expected rise.

The Commerce Department reported Wednesday that the current account deficit, a reading that includes investment flows and other transfers as well as trade, dropped 7.9 percent to $673.3 billion in 2008 from $731.2 billion in 2007, its second straight annual decline. As a percentage of the economy, the fourth-quarter deficit was 3.7 percent, the lowest level since the figure was 3.4 percent in the fourth quarter of 2001.

Oil prices fell Wednesday on a government report showing that crude and gasoline inventories are bulging with surplus supply. Benchmark crude for April delivery fell $1.02 to settle at $48.14 a barrel on the New York Mercantile Exchange. The Energy Information Agency said crude inventories rose 1.94 million barrels for the week ended March 13. The 353.3 million barrels of crude is the highest reported level in U.S. inventories since June 29, 2007.

The Federal Reserve, which wrapped up a two-day meeting Wednesday, kept a key interest rate at a record low near zero as Fed officials continue to believe that the biggest current problems are the deep recession and severe financial crisis, not inflation. Indeed, Fed officials have expressed concerns about the opposite problem, that a deepening recession and prolonged housing slump could push the country into a period of deflation.

Economic equilibrium? 03/18/09 [Last modified: Wednesday, March 18, 2009 11:18pm]
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