Some further production reductions may be needed in the spring to get inventories to desired levels. Then production will need to rise back to the level of sales. Also, the dramatic plunge in profits during the fall do not appear to have been replicated in the winter. Some prices increased, as the price deflator for GDP rose 3.2 percent. This is about 1.5 percentage points above winter price gains.
Productivity appears to have slowed, but only about half a percentage point.
Energy prices continued to rise, but slightly slower in the winter than in the fall. Thus, prices improved relative to costs by more than a percentage point as compared to the fall. But there is bad news as well. The rise in prices provided some relief from rising cost pressures, but it also continued to drain the purchasing power of consumers. Indeed, some of the large growth in credit card balances during the winter may have been caused by rising utility bills that forced some households to pay only minimum balances on their credit card debt.