Economy cooling after strong third quarter

Government reports on retail sales and producer prices point to a cooling trend following a strong third quarter. Retail sales increased just 0.2% in October, following an increase of 0.7% in September. Retail sales are up 5.2% over the past 12 months, according to the Department of Commerce. Gasoline prices have risen 0.8% for October, following a 1.8% increase in September. Excluding gasoline sales, retail sales rose 0.1% last month. Inventory at U.S. businesses increased 0.6% in September, the most in two months, while inventories increased 0.4%, according to another Department of Commerce report. The Department of Labor said the producer price index increased 0.1%, while core prices-which exclude food and energy costs-were unchanged. The government began fiscal year 2007 with a $55.6 billion deficit, up sharply from a deficit of $49.3 billion last year, according to the Department of the Treasury, in a report released yesterday. Receipts increased to $178.2 billion in October, while outlays totaled $233.7 billion, the Department of The Treasury reported. The Congressional Budget Office last month estimated a deficit of $59 billion for October.