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US Economy Shows Continued Growth - 2003-12-16

Newly released statistics show continued signs of growth for the U.S. economy.

The Federal Reserve says U.S. industrial production jumped by 0.9 percent in November, the strongest showing in more than four years and more than double what many economists had predicted, led by strong gains in factory and utility output.

At the same time, the Commerce Department reports housing construction rose by 4.5 percent in November, registering the fastest building pace for new homes and apartments in nearly two decades.

Economist James Glassman of the American Enterprise Institute says all signs point to continued economic expansion.

"It is very, very impressive," he said. "These new figures show a confirmation that business investment is improving, so it is not just the consumer who is spending and boosting the economy. This recovery is much broader."

Is brisk economic activity kindling inflation? Not according to the Commerce Department, which says consumer prices dipped by 0.2 percent in November, thanks to less expensive gasoline, clothes and airline fares in the United States. Excluding food and energy prices, so-called "core" prices declined by 0.1 percent. November's drop followed a flat consumer price reading in October.

James Glassman says continued low inflationary figures will reduce any impetus Federal Reserve Chairman Alan Greenspan may have to boost interest rates in the coming months.

"He is not a knee-jerk [automatic] interest rate-raiser in the face of growth," he said. "He believes that we can have growth and low inflation at the same time. There is no need to step on the brakes [raise rates] because you are growing. So I think it is highly unlikely that we will see interest rates rise before the spring."

On another front, the Commerce Department reports that U.S. trade deficit narrowed slightly in the third quarter, to $135 billion, from the record $139 billion for the previous three-month period.