Economy recovering without inflation

WASHINGTON — Consumer prices slid, industrial production surged and housing construction sizzled in November, signs that the economic recovery is powering ahead without unwanted inflation.

The latest batch of economic news Tuesday raised hopes that the recovery will be lasting and that businesses may feel more inclined to boost hiring, analysts said.

"We have no inflation, once idle factories are pumping out goods and houses are being erected at a breakneck pace. This is a perfect recipe for economic strength," said Richard Yamarone, economist at Argus Research Corp.

After being flat in October, the Consumer Price Index dipped 0.2 percent in November, pulled down by cheaper gasoline, clothes and airline fares, the Labor Department reported. It marked the first decline since April.

Industrial production, meanwhile, jumped 0.9 percent last month, the strongest performance in four years and more than twice the 0.4 percent rise registered in October, the Federal Reserve said in a report that offered a fresh sign that the nation’s battered manufacturing sector is truly on the mend.

"We have been anticipating and hoping for a robust turnaround in manufacturing for some time. And though the recovery has had a few false starts, we’re now solidly out of the blocks and moving along the right track," said David Huether, chief economist at the National Association of Manufacturers.

In other economic news, the red-hot housing market continued to sizzle in November, with construction of new homes and apartments rising 4.5 percent to an annual rate of 2.07 million units, the fastest building pace in nearly two decades, the Commerce Department said.

"It’s all a very positive story and it all seems to fit into a picture that the economy really is picking up and probably picking up enough to generate some jobs," said Bill Cheney, chief economist at John Hancock.

That’s important to President Bush as he heads into his 2004 re-election campaign. Since Bush took office in January 2001, the economy has lost 2.3 million jobs, giving Democrats a campaign issue to use against him.

"There is more yet to be done. We will continue our efforts until every American looking for work can find a job," said Treasury Secretary John Snow.

In the CPI report, excluding energy and food prices, which can swing widely from month to month, "core" prices fell 0.1 percent in November, the first drop since December 1982 and down from a 0.2 percent increase in October.