Shobhana Chandra and Timothy R. Homan
October 16, 2008
The U.S. economic downturn deepened in September and October as the credit crisis intensified, reports showed today.
- A d v e r t i s e m e n t
Industrial output fell 6 percent in the third quarter, the most since 1991, and a factory index for the Philadelphia region hit an 18-year low this month, Federal Reserve figures showed today. The Labor Department reported that for the first time in two years consumer prices didn’t increase for two straight months.
Today’s numbers give the Fed scope to lower interest rates again this month. Stocks slid and interest-rate futures showed rising expectations of a half-point cut in the Fed’s benchmark to 1 percent.
“The credit crunch is intensifying, and enough damage has been done to ensure the next couple of quarters will be much weaker,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “`The pendulum has swung sharply to the downside risks to growth rather than inflation.”
Shutdowns caused by hurricanes and a Boeing Co. strike caused production at U.S. factories, mines and utilities last month to decline 2.8 percent, the most since 1974, after a 1 percent drop. The median forecast of 73 economists surveyed by Bloomberg News was for a 0.8 percent fall.