To: Glenn D. Rudolph who wrote (12201 ) 1/30/1998 1:28:00 PM From: Moonray Respond to of 22053
U.S. '97 Economic Growth Fastest in Nine Years WASHINGTON (Reuters) - The U.S. economy boomed ahead at its fastest clip in nine years during 1997, the Commerce Department said Friday, accompanied by the slowest rate of price rises in more than three decades. Gross Domestic Product expanded 3.8 percent last year -- the strongest growth since a matching 3.8 percent in 1988 when Ronald Reagan was still President. In the fourth quarter alone, GDP surged at an unexpectedly strong 4.3 percent rate, exceeding Wall Street economists' forecasts for a 3.7 percent quarterly growth pace. Despite vigorous growth, inflation was muted. Two key measures of price changes -- the implicit price deflator and the chain-weighted GDP price index -- each gained only 2 percent during 1997. That was the slowest rate of advance for each measure since 1965, department officials said, continuing a steady decline from increases of 2.5 percent in 1995 and 2.3 percent in 1996. Federal Reserve Chairman Alan Greenspan told Congress on Thursday that the U.S. economy, entering 1998, appeared "exceptionally healthy, with robust gains in output, employment and income" and falling inflation. The U.S. central bank is expected to keep interest rates steady when it meets next week in the absence of any sign that brisk growth is generating price pressures. Commerce said the acceleration in growth during last year's fourth quarter -- to a 4.3 percent rate from the third quarter's 3.1 percent -- stemmed from renewed inventory-building, a falloff in imports and stronger exports as well as exceptionally strong homebuilding spurred by low interest rates. The economy is expected to lose some steam this year, growing more slowly in part because Asia's economic crisis will shrink export opportunities. There were a few indications that businesses were growing cautious, including a 3.6 percent rate of contraction in fourth-quarter business investment, the first quarter in six years that corporations shrank their expansion plans instead of adding to them. o~~~ O