Cross Timbers Business Report, Volume 10, Number 3, Spring 1997 Page: 1
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Cross Timbers Business Report
Published by Tarleton State University, William L. Beaty, EditorVolume 10, No. 3
Spring, 1997
Economic Growth Soars in First Quarter
by William L. BeatyReal gross domestic product, the inflation-
adjusted measure of the nation's output of goods
and services increased at a torrid 5.5 percent
annual rate in the first quarter of 1997, the
highest rate in almost 10 years. Last quarter's
growth rate compares to a 3.8 percent expansion
in 1996's fourth quarter, and is more than twice
the 2 to 3 percent growth rate considered
desirable by Federal Reserve policy makers.
Despite the period's strong growth, inflation
remained in check, with the implicit price
deflator increasing at only a 2.7 percent pace.
This figure is well below the 4 percent rate many
economists consider the maximum limit of the
goal range.
Strong consumer and business spending
provided the thrust for last quarter's output gain.
Consumer spending soared at a 6.4 percent rate,
fixed investment expenditures grew by almost 10
percent, and inventory spending advanced by
$46.1 billion. Declines in net exports and
government spending damped this expansion
somewhat. Exports' 8.1 percent increase were
swamped by a 21.9 percent explosion of imports,
and weakening military spending paced a 0.6
percent decline in government outlays.
While many economists fear the past two
quarters' robust growth rates portend future
inflationary pressures, others point to present
well-behaved price statistics to infer fundamental
changes in the economy have reduced potential
inflationary pressures. At present, Federal
Reserve Chairman Greenspan appears to mirror
the latter group, as that body has moved only
tentatively to raise interest rates.Gross domestic product statistics are
compiled and published on a quarterly basis by
the United States Department of Commerce.
Preliminary first-quarter figures will be subject to
revision in future months.
REAL GROSS DOMESTIC PRODUCT
Annual Change RatesPercent
Q1 Q2 Q3 Q4 Q1
1996 1997
Source: U.S. Department of CommerceInterest
Rates Rise in 1997
By Clay A. ParkerFederal Reserve Chairman Alan Greenspan
recently precipitated a stock market selloff when
he raised interest rates in order to fight a likely
inflationary period. However, interest rates have
been steadily increasing for most of the past year.
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Tarleton State University. Department of Social Sciences. Cross Timbers Business Report, Volume 10, Number 3, Spring 1997, periodical, Spring 1997; Stephenville, Texas. (https://texashistory.unt.edu/ark:/67531/metapth298209/m1/1/: accessed May 7, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Tarleton State University.