Welcome Back an Old Friend - Inflation!

Wow! Haven't seen that rascal since - the last Republican administrations! Good to see you ol' pal - it's just what the Kerry Campaign needed to seal the deal.

US slashes first-quarter growth, inflation higher

WASHINGTON, June 25 (Reuters) - The U.S. economy grew much more slowly than previously thought in the first quarter while inflation was higher, a government report showed on Friday.

The surprise downward revision to gross domestic product -- which measures total output within the nation's borders -- cut growth to a 3.9 percent annual rate in the first three months of 2004 from the 4.4 percent reported a month ago and below the 4.1 percent pace in the final quarter of last year.

The government also ratcheted up a key gauge of inflation, confirming an acceleration in price rises that has fueled expectations the Federal Reserve will begin raising interest rates from 1958 lows next week to head off inflation.

The core price index for consumer spending -- a favorite of Fed Chairman Alan Greenspan that cuts out volatile food and energy prices -- gained at an annual rate of 2.0 percent in the quarter, a bump up from the 1.7 percent reported a month ago.