More tidbits from today's GDP report from the US Department of Commerce.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.3 percent in the second quarter, compared with an increase of 3.4 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 0.7 percent in the second quarter, compared with an increase of 1.8 percent in the first.This is the smallest price index rise since 2001:III when the overall economy caught a whiff of deflation, with the price index falling 0.2%.
Factoring out volatile food and energy prices, the price index for 2003:II (+0.7%) was just a tick above its recession low in 2001:III (+0.6%). Now the US economy overall is running at half the core inflation rate of 2002, which was itself extremely low.
Recall also that core consumer price inflation for the first half of 2003 is running at a mere 1.7%, a full half a percentage point below where it was in the second half of 2002 -- and it is trending downward every month.
This is still an economy flirting with deflation, moreso than ever before.