By Martin Crutsinger
The Associated Press
WASHINGTON - Severe winter weather and war jitters took a further toll on the U.S. economy, sending wholesale energy prices soaring and triggering declines in both manufacturing output and consumer confidence.
The government reported Friday that wholesale prices jumped by 1 percent in February, led by a 7.4 percent surge in energy costs.
The Labor Department said last month's spurt in the Producer Price Index, which measures price pressures before they reach the consumer, followed a 1.6 percent jump in January, which had been the sharpest one-month increase in 13 years.
Output at the nation's manufacturing plants fell for the second month in three, although overall output at factories, mines and utilities managed a meager 0.1 percent gain.
Consumer sentiment - buffeted by rising gasoline prices, job layoffs and fears of retaliatory terror attacks should the United States invade Iraq - dipped in March to 75.0 from a February reading of 79.9, according to a preliminary report from the University of Michigan.
The latest onslaught of bad economic news, following news last week that 308,000 jobs were lost in February, heightened worries that the country could be tipped into another recession by rising anxiety over what might happen if the United States should go to war coupled with weak consumer spending.
"When consumer confidence numbers stay this low for a period of time, you have to face the reality that the mood has changed," said Robert Gay, chief research economist at Commerzbank in New York.
He and other economists said the chances of the country sliding back into recession were increasing as long as uncertainty about what might happen in a war left businesses unwilling to commit to new hiring or expansion plans.
The Federal Reserve said that the 0.1 percent drop in output at manufacturing plants reflected big cutbacks at auto factories in the face of two months of declining sales.
Overall, industrial output managed a 0.1 percent gain as the manufacturing weakness was offset by gains of 1 percent in mining, which includes oil production, and 1.3 percent at utility companies, where demand surged because of the cold weather.
"This says loud and clear that the manufacturing recovery remains stalled," said Jerry Jasinowski, president of the National Association of Manufacturing.
He urged Congress to pass quickly President Bush's new round of $726 billion in tax cuts.
Jasinowski said that since December 2001, manufacturing production has edged up by 1.6 percent, far below the 10.8 percent output gain manufacturing averaged during the first 14 months of the previous six recoveries.
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