The government reported yesterday that industrial production plunged 1.7 percent in November -- the worst drop since the depths of the 1982 recession -- while wholesale prices went up 0.5 percent.

Cuts by automobile manufacturers accounted for about half of the drop in industrial production, but every major factory sector recorded some decline. The increase in November wholesale prices came despite a sharp drop in oil prices compared with previous months.

Some analysts argued that the numbers were distorted by some one-time events and thus were not as gloomy as they might seem at first glance. But both reports were worse than pessimistic market expectations. They raised the prospect of a recession more bitter than anticipated, but without the lower inflation that usually accompanies an economic slowdown.

"This was a double dose of deadly news," said Allen Sinai of The Boston Co., who has been predicting recession since well before Iraq invaded Kuwait. "The production decline was very widespread. It was almost scary."

He added, "The inflation worry has to go away before the central bank can act." Others agreed that the Federal Reserve may be more reluctant to stimulate the economy by lowing interest rates when inflation is climbing.

But the inflation report had a positive side also. Prices for intermediate goods -- those a step or so down the production chain from finished goods -- rose a scant 0.1 percent, while food and energy prices at that level fell.

Crude prices fell a record 6.2 percent, and the price of crude energy plunged 10.3 percent, after three consecutive months of double-digit increases.

Shrinking industrial production, a sign of weak demand, usually tends to bring down prices. Some analysts said that is yet likely to happen, because climbing unemployment and anemic retail sales will hamper the ability of manufacturers to pass on higher costs.

But on the surface, yesterday's industrial production report from the Fed and the Labor Department's Producer Price Index added up to a classic example of 1970s-style stagflation. The production decline, spearheaded by a huge 20 percent plunge in motor vehicle assemblies, was the worst since December 1982.

At the least, yesterday's production report underlined the Department of Labor's stark employment report a week ago, showing 200,000 factory jobs lost in November. More than a fourth of those losses came from auto industry layoffs.

At the same time, the inflation report showed stubborn inflation for goods at the retail level, even in the face of a 2.6 percent drop in gasoline prices and a 7.3 percent drop in heating oil.