U.S. Economy: Factory Production Contracts More Than Forecast (Carlos Torres)

  March 17 (Bloomberg) -- Industrial production in the United States dropped more than forecast in February as the economic slump deepened even before the crisis in financial markets intensified.

  Production at factories, mines and utilities fell 0.5 percent last month, the first decrease in four months, the Federal Reserve said today. A report from the New York Fed showed its manufacturing index dropped to a record low in March.

  Factories are cutting back as the biggest recession in housing in a generation prompts Americans to spend less on furniture, appliances and automobiles. The odds of a full percentage-point reduction in the Fed's benchmark rate at tomorrow's meeting almost doubled as policy makers try to prevent a meltdown in lending that will make the economic contraction even worse.

  ``The U.S. economy is in a recession and now you have the problems in financial markets that the Fed also has to address,'' said Brian Bethune, a financial economist at Global Insight Inc., a Lexington, Massachusetts, forecasting firm. ``At this point, getting interest rates down as quickly as possible is an antidote for both problems.''

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