Several weeks ago Federal Reserve Board Chairman Alan Greenspan and other economists were still talking about the U.S. economy being in a "soft patch." Now, claims economist Peter Morici, the economy is in a "sweet spot" of low inflation and moderate growth. "The only question mark that remains is volatile crude oil prices, but the U.S. economy is proving remarkably resilient in the face of instability in petroleum markets," says Morici, a professor at the University of Maryland's Smith School of Business in College Park.
Economic data released at the end of last week lend credence to Morici's assessment.
Overall, June prices at the producer level were unchanged from May, and the so-called core Producer Price Index, which excludes the sometimes volatile month-to-month swings in prices for food and fuel, actually fell one-tenth of a percentage point last month, the U.S. Labor Department reported on July 15. Manufacturing production grew four-tenths of a percentage point in June, and capacity utilization among U.S. manufacturers increased two-tenths of a percent to 78.4%, the Federal Reserve reported, also on July 15. That same day, the U.S. Commerce Department reported that U.S. business inventories, adjusted for seasonal variations, were an estimated $1.299 trillion at the end of May, up a tenth of a percent from their end-of-April mark.