Economy 27 Apr 2007 11:38 am
The faltering housing market placed its stamp on the overall economy with the news that GDP slowed to 1.3% growth in the first quarter of 2007. The negative effects of the housing slump are understandable. What should concern is the possibility of stagflation, inflation plus a stagnant economy:
An inflation gauge tied to the GDP report and closely watched by the Fed showed that core prices — excluding food and energy — rose at a rate of 2.2 percent in the first quarter, up from a 1.8 percent pace in the fourth quarter. Another measure tracking all prices jumped by 3.4 percent in the first quarter, compared to a 1.0 percent decline, on an annualized basis in the fourth quarter.
With President Bush’s troubled the last thing he wants is a slumping economy