The Outlook: Good News, Bad Vibes

The U.S. economy is far from ailing, but it may not be as robust as it seems. The Department of Commerce reported last week that the gross national product expanded at a 3.7% annual rate during the first quarter. The strong showing, though, was partly caused by an increase in unsold business inventories. This inventory buildup, the result of sluggish consumer demand, could be a sign of an underlying economic weakness.

The Government also said that during the past three months, the consumer price index dropped at a 4.3% annual clip, the steepest decline in 37 years. Again, economists note a disturbing trend beneath the surface. Most of the CPI’s dip has been the result of falling oil prices, which are now starting to rise again.