WASHINGTON (AP) - The government reported Wednesday the U.S. economy
topped the $5 trillion mark for the first time last quarter, powered
by a strong 5.5 percent growth rate that caused some analysts to
express concern about rising inflation.
Even discounting for a statistical bounceback from the 1988
drought, a major factor in the overall increase, the gross national
product grew at a solid 3 percent annual rate during the
January-March period, the Commerce Department reported.
The stock market's response was inconclusive, with stock values
drifting in a narrow range. The Dow Jones average of 30 industrials
edged up 2.20 to 2,3889.11.
J. Antonio Villamil, chief economist for the Commerce
Department, said the economy's performance in the first quarter
``appears to be consistent with moderate, sustainable growth for the
balance of the year'' and contains no threat of a recession.
Commerce Secretary Robert Mosbacher said the growth pattern, in
which the pace of consumer spending slowed while exports and
business investment rose, was ``a desirable one for the
sustainability of the economic expansion.''
Private analysts cautioned, however, that the report offered
some troubling indications that inflation was accelerating.
A GNP index that measures prices for a fixed marketbasket of
goods and services rose at an annual rate of 5 percent in the first
quarter, up from 4.2 percent during the previous three months.
While half of the increase was linked to a pay raise for
government employees, ``certainly it suggests we're in a period of
accelerating inflation,'' said economist David Jones of Aubrey G.
Lanston & Co. in New York.
Robert G. Dederick, chief economist for Northern Trust Co. in
Chicago, said the economy's strong growth in the first quarter was
``too much of a good thing.''
``The report suggested that the economy was still growing at a
rate too fast for comfort and the manifestation of this was in the
inflation figure,'' Dederick said. ``No matter what you look at, the
inflation worry is there.''
Villamil said that discounting the effects of the pay raise and
recent food and energy price increases, the underlying inflation
rate seems to be holding ``at a stable lower level of about 4 or 4
The nation's total output reached an annual rate of $5.117
trillion last quarter before adjusting for inflation, the first time
it had exceeded $5 trillion. After adjusting for price increases,
the GNP rose at an annual rate of $4. …