Reverse Course

By .

The U.S. economy is speeding up --in the wrong direction. During the third quarter, production dropped faster and prices rose more rapidly than in the second quarter, according to a Commerce Department report last week.

From July through September, real output of goods and services fell at an annual rate of 2.9%. That was the third quarterly decline in a row --the longest downhill run since the recession of 1960-61--and the drop was almost twice as steep as in the April-June period. Some reasons: the deepening depression in housing, the impact of high costs for imported oil and a sudden downturn in inventory-building by businessmen who evidently fear softening sales. The rate of inflation, after slowing a bit in the second quarter, took a disturbing leap to 11.5%.

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