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Two reports paint brighter economic picture

WASHINGTON — The outlook for the U.S. economy brightened a little Tuesday after reports that consumer prices stayed tame and home builder confidence rose to the highest level in six years.

A third report showed factory output grew only modestly in September, a reminder that the economy is still weak.

Low inflation could give consumers even more incentive to spend at a time when their confidence is at a five-year high. That could boost growth and help lift American manufacturers out from their slump.

Tuesday's data showed:

• The consumer price index rose a seasonally adjusted 0.6 percent in September, the Labor Department said, driven by higher gas prices. When excluding gas and food costs, prices rose just 0.1 percent. Overall prices have risen just 2 percent in the 12 months that ended in September, in line with the Federal Reserve's inflation target.

• The National Association of Home Builders said its survey of builder sentiment rose to a reading of 41 this month, the highest level since June 2006. The index is still below 50, indicating negative sentiment about the market. But it has steadily climbed in the past year from a reading of 17, further evidence of a slow but steady housing recovery. Americans are buying homes again, pushing up sales and prices after a six-year slump.

• The Federal Reserve said output at factories, mines and utilities rose 0.4 percent in September after a sharp drop in August. Factory output, the most important component of industrial production, edged up only 0.2 percent last month. The report also noted that factory output was down for the July-September quarter. That marked the first quarterly decline since spring 2009, when the country was still in recession.

Two reports paint brighter economic picture 10/16/12 [Last modified: Tuesday, October 16, 2012 10:19pm]
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