GDP Unrevised at 2.5 Percent, Fed's Preferred Inflation Gauge Falls

Thursday, 26 Sep 2013 08:35 AM

 

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The U.S. government left its estimate for economic growth in the second quarter unchanged, but said prices for goods and services purchased by U.S. households fell for the first time in four years.

The Commerce Department said on Thursday gross domestic product expanded at a 2.5 percent annual rate in the April-June period.

Also in the report, the department said its price index for consumer purchases, which is the Federal Reserve's preferred gauge of inflation, fell at a 0.1 percent rate.

That is a worrisome sign for the national economy because it suggests businesses have little leverage to raise prices.

It was the first decline since the first quarter of 2009, which were some of the darkest days of the 2007-09 recession.

Even stripping out volatile food and energy costs, prices rose at only a 0.6 percent rate, also the weakest reading for this so-called core category since early 2009.

The report also showed government austerity dragged on U.S. economic growth a little less in the second quarter than initially estimated, chipping about a tenth of a point off the growth rate.

© 2014 Thomson/Reuters. All rights reserved.

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