
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 30, 1993                   TAG: 9304300182
SECTION: BUSINESS                    PAGE: B4   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

GROWTH MIGHTY SLUGGISH

Consumers turned cautious and military spending plummeted during the first three months of the year, dramatically slowing the economy's growth rate to just 1.8 percent, the government said Thursday.

The latest increase in the gross domestic product, the sum of all goods and services produced in the United States, was less than half the 4.7 percent annual rate of the 1992 fourth quarter, the Commerce Department said.

Economist Allen Sinai of the Boston Co. Economic Advisers Inc. said the constant wrangling in Washington, rather than the presence or absence of a small economic stimulus package, is the biggest factor making consumers nervous.

"That kind of back and forth is deadly. . . . They ought to stop playing these games and instead spend time trying to figure out why the economy is growing so slowly," he said.

Economists had anticipated a first-quarter rate of between 2 percent and 2.5 percent.

Some attributed the slowdown to temporary factors, including a severe East Coast storm in mid-March, smaller-than-usual tax refunds and an inevitable retreat by consumers after a holiday spending spree that pushed the fourth-quarter growth rate to a five-year high.

Other analysts, however, pointed to longer-lasting drags on the economy, including slumps in Europe and Japan, which are depressing U.S. exports sales, and continuing defense cuts.

"I don't think this number in any way implies we are on the threshold of another recession, but it illustrates the unevenness and lack of consistency of this economic expansion," said Norman Robertson, an adjunct economics professor at Carnegie-Mellon University in Pittsburgh.

Consumer spending in the first quarter grew at a 1.2 percent rate after shooting up 5.1 percent in the fourth. Housing construction grew 0.2 percent after jumping 25.1 percent.

Military spending dropped 25.5 percent, the most since the government began tracking the category in 1972. Excluding that, GDP rose at a 3.5 percent annual rate. Defense spending, adjusted for inflation, now is the lowest since 1984.

The various changes added $22.3 billion to the GDP, bringing it to a seasonally and inflation-adjusted annual rate of $5.01 trillion.

by CNB