Industrial Production Falls 1.1%; CPI Shows Still No Inflation

Government reports released Friday showed that industrial production continues to be a casualty of the post-Sept. 11 economy and that there is still little or no inflation in the economy.

Industrial production fell by 1.1% in October, its largest drop since November 1990, the Federal Reserve said.

At the same time, the consumer price index, one of the most closely watched indicators of inflation, fell 0.3% in October, according to the U.S. Department of Labor.

For trucking, lower industrial production is bad news because the industry relies so heavily on shipments of factory goods for business. Slower production means fewer shipments and reduced demand for trucking.



The Fed also reported that the amount of production capacity being put to use slipped to 74.8% for the month. The rate, down from 75.7% in September, is at its lowest point since June 1983. The figure is more bad news for truckers because idle factories do not produce any goods to be shipped.

Meanwhile, the drop in the CPI, coupled with a 0.2% rise in the core CPI, shows that there is no inflation in the U.S. economy right now. Bloomberg reported analysts said that a stable dollar allows the Fed to cut interest rates even further.

The core CPI, excludes volatile products like energy and food, matched its increase from the previous three months, demonstrating that economic conditions were indeed holding inflation in check.

The Fed pared rates down to 2% last week, and has hinted that an 11th rate cut could be possible before the end of 2001, news services reported.

Lower interest rates could increase consumer and business spending and lead to greater demand for trucking services