New U.S. data suggest a continued pickup in economic activity with moderate inflation that will make it easier for America's central bank to leave interest rates at historic lows.
As a rule, economists do not welcome upticks in prices that signal inflationary pressure or a widening of America's trade deficit showing U.S. exports lagging further behind imports. But what would normally be worrying signs are actually viewed in a more positive light at a time when the United States is emerging from a deep and painful recession.
A year ago, economists openly worried about the recession sparking a destructive deflationary cycle in which the purchasing power of the U.S. dollar rises over time. Such a trend would incentivize consumers to postpone purchases, which would further slow economic activity and put downward pressure on prices for goods - causing the cycle to repeat itself.
And so a rise in the U.S. Consumer Price Index does not seem to worry financial analysts, especially since prices were largely in check if volatile energy and food categories are excluded.
Beth Ann Bovino is a senior economist at Standard and Poor's. "Certainly energy was a factor. So the CPI [Consumer Price Index] was up point-four percent in November, and the core price, which is something that most people look at - core price taking out food and energy - was actually relatively tame," she said.
Similarly, a widening U.S. trade deficit is no cause for celebration. But analysts say a jump from $115 billion to $132 billion in the third quarter of the year provides some evidence that American consumers are beginning to spend again. Consumer spending accounts for more than two-thirds of U.S. economic activity, and is seen as a critical element of a sustained economic recovery.
Meanwhile, the Commerce Department reports new home construction rose 8.9 percent in November.
"Seeing builders start to accumulate permits for the future does give some promise that we will begin to see some improvement [in home construction activity] as we move into next year," said National Association of Home Builders economist David Crowe. "Consumers have to get a little more confident, and builders have to be able to borrow money to build the houses. And those two critical elements are very fragile right now."
Making it easier for small businesses to access credit has been a prime focus of the U.S. government this week, including Monday's meeting between President Barack Obama and top American bank executives.