EconomicCrisis.US

Industrial production in the U.S. increased more than forecast in November and consumer prices slowed, indicating the recovery is gaining momentum without generating inflation.

Output at factories, mines and utilities rose 0.4 percent, the biggest gain since July, after a revised 0.2 percent drop in October, a Federal Reserve report showed today in Washington. The consumer-price index climbed 0.1 percent in November after a 0.2 percent gain the prior month, the Labor Department said.

Assembly lines are speeding up as business investment and exports grow and consumer spending accelerates, helping to buoy an expansion that Fed policy makers said yesterday isn’t strong enough to reduce a jobless rate hovering near 10 percent. Price increases that are below central bankers’ goal will boost the case to maintain the Fed’s purchases of $600 billion in securities through June to spur growth.
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The harsh reality is that it will take tremendous growth in the GDP even to make a small dent in the unemployment rate.

Despite some mildly good economic news this week including an uptick in retail sales for October, the US economy is likely still years away from seeing unemployment fall in any meaningful way.

In fact, the American economy appears to barely be able to keep joblessness from rising further. US unemployment has held steady at 9.6% since August. For the three months ending in September, GDP grew at annual rate of 2% — still a bit short from the 3% minimum needed to solidly keep the jobless rate from trending up.
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The U.S. economy grew at a 1.7 percent annual rate in the second quarter, marking the start of a slowdown in growth that has concerned the Federal Reserve.

The revised increase in gross domestic product was more than the median forecast of economists surveyed by Bloomberg News and compares with a 1.6 percent estimate issued last month, figures from the Commerce Department showed today in Washington. The world’s largest economy grew 3.7 percent in the first three months of the year and 5 percent at the end of 2009.
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How much of a boost to the US recovery could another trillion dollars or two buy?

That’s a tricky question for the Federal Reserve when it meets on Tuesday to debate what would warrant pumping more money into the financial system.

To battle the financial crisis, the Fed bought $1.7 trillion of longer-term Treasury and mortgage-related bonds, supplementing its pledge to keep interest rates near zero for a long time.

All told, it helped stabilize a collapsing financial system and to avert what could have been a second Great Depression.
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