US economic reports show expansion

The US economy remains on a recovery path. Bloomberg reports:

Regional Fed bank reports indicated that manufacturing, which has helped drive the recovery from the recession, continued to expand this month.

The Philadelphia Fed’s general economic index dropped to 11.5 in October from a September reading of 14.1 that was the highest since June 2007. The Fed Bank of New York’s economic index soared to 34.6 this month, the highest since mid-2004, from 18.9 in September. Readings above zero indicate expansion...

The number of Americans filing first-time claims for unemployment benefits dropped by 10,000 to 514,000 in the week ended Oct. 10, lower than forecast, from a revised 524,000 the week before, Labor Department data showed.

Meanwhile, consumer prices maintained their climb at both the headline and core levels in September.

Consumer prices rose 0.2 percent in September after a 0.4 percent gain in August, the Labor Department said today...

Energy prices increased 0.6 percent in September as the cost of gasoline climbed 1 percent. Excluding food and energy costs, the so-called core index climbed 0.2 percent, more than anticipated and pushed up by health care and a rebound in auto prices following the expiration of the government’s “cash for clunkers” program.

Another Bloomberg report suggests that:

Slowing inflation may give the upper hand to Federal Reserve policy makers who want to keep interest rates low for a long time to support a recovery from the worst recession since the 1930s.

The Australians, though, may have other ideas. Again from Bloomberg:

Australian central bank Governor Glenn Stevens’s view that he can’t be “too timid” in raising borrowing costs is stoking speculation the benchmark interest rate will be increased next month by the most in a decade.

Experience “counsels against” an approach where policy makers who cut rates rapidly in response to a threat become “too timid to lessen that stimulus in a timely way when the threat has passed,” Stevens said in Perth yesterday...

“I’ve said it consistently, interest rates will go up because they’ve been brought to emergency lows,” Prime Minister Kevin Rudd told Melbourne radio station 3AW today. “I don’t see any point whatsoever in trying to be cute with people about that.”

The ECB, however, is more likely to follow their US counterparts, considering the inflation trend in the euro area as reported by Eurostat:

Euro area annual inflation was -0.3% in September 2009, down from -0.2% in August. A year earlier the rate was 3.6%. Monthly inflation was 0.0% in September 2009.

EU annual inflation was 0.3% in September 2009, down from 0.6% in August. A year earlier the rate was 4.2%. Monthly inflation was 0.0% in September 2009.