Newspaper article St Louis Post-Dispatch (MO)

Economy Shrugs off Trouble, Grows 2.8% Markets Slump, Fearing Higher Interest Rates

Newspaper article St Louis Post-Dispatch (MO)

Economy Shrugs off Trouble, Grows 2.8% Markets Slump, Fearing Higher Interest Rates

Article excerpt

The economy is surging back to life, gratifying the White House but jolting Wall Street. Powered by a heavy spending for business computers and consumer goods, growth accelerated to 2.8 percent in the first three months of the year despite blizzards, government shutdowns and a major auto strike.

President Bill Clinton, hoping for a strong economy in an election year, was pleased, but financial markets tumbled, fearing the stronger-than-expected growth will force the Federal Reserve to raise interest rates.

Private analysts agreed that the surprisingly strong 2.8 percent increase in the gross domestic product - the nation's total output of goods and services - depicted a sizable rebound from a barely discernible 0.5 percent GDP gain in the fourth quarter of 1995.

"The economy is cooking," said Allen Sinai, chief global economist at Lehman Brothers in New York. "This report says business is terrific and life for American workers is going to be much better this year than last year in terms of job availability and higher pay. …

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