BLS DAILY REPORT, MONDAY, FEBRUARY 3, 1997 __Fueled by exports and consumer spending, real gross domestic product grew at a 4.7 percent annual rate in the last quarter of 1996, up from 2.1 percent in the third quarter, the Commerce Department reports. For the year, GDP was up 2.5 percent compared with 2.0 percent in 1995. The GDP number came in stronger than expected. Analysts expect growth to moderate in the first quarter because the big contribution from the trade sector is not likely to be repeated ....(Daily Labor Report, pages 2,D-3). __The U.S. economy surged in the final three months of last year, making 1996 the second-best year for growth since the late 1980s, while inflation fell to the lowest level in three decades ....(Washington Post, Feb. 1, page A1). __Powered by a surge in exports, the economy grew at a surprisingly vigorous 4.7 percent pace during the final 1996 quarter, more than twice as fast as during the summer. Despite this latest surge, coming after nearly five years of steady growth that has kept factories humming and unemployment at low levels, the economy showed almost no signs of strain. Indeed, inflation by one important measure shriveled to the lowest point in 30 years ....(New York Times, Feb. 1, page A1). __"It doesn't get much better than this," says the Wall Street Journal (page A2). The economy soared in the quarter with inflation low .... Even as the economy ended last year on a high note in terms of overall growth, labor costs held to their moderate path. By virtually every major government and private measure, wages and benefits remained in the 3-percent range in 1996 -- reassuring policy-makers and financial markets about the prospects for low inflation over the next 12 months. Private analysts were hard pressed to pinpoint likely sources of worrisome inflation in 1997. The slowdown in benefit costs has probably hit bottom, analysts say, but only a slight pickup is expected this year Labor shortages are still common in some industries, but temporary help firms are increasingly picking up the slack there, an industry group said ....Forecasters are expecting expansion of nonfarm payrolls to slow over the next few months ....Analysts warn that January's seasonal patterns make it difficult to project that month's labor market performance (Daily Labor Report, pages 1,D-1). Fed Chairman Greenspan told the nation's governors that he sees continued growth and low inflation for the U.S. economy. The occasion was the meeting of the National Governors' Association winter meeting in Washington, D.C. ....(USA Today, page 1B). As if the Fed needed any more help taming inflation, it just got a powerful new tool, one that will likely prove useful to investors as well, says the Wall Street Journal (page C1). The new tool? The Treasury Department's long-awaited inflation-indexed securities that went on sale last Wednesday, to a rousing reception from investors ....Analysts say that once the securities develop a track record, and more auctions are held, they will help economists and investors make predictions about inflation. Indeed, the securities represent the first direct hedge ever developed in the U.S. against inflation, and the first means by which economists can judge the extent of inflationary fears in the economy.Traditional bond analysis says yields are made up of two parts. The first is simply the compensation paid investors for lending their money. The second is an amount to compensate for the expected loss in purchasing power caused by inflation over the course of the bond's maturity. That part is called the bond's "risk premium." Now, simply by watching the difference in the yield of a regular Treasury security compared with an inflation-indexed security of similar length, anyone can get a sense of investors' inflation expectations .... The Wall Street Journal's feature"Tracking the Economy" (page A4) forecasts that the January unemployment rate, to come out Friday, will remain at the 5.3 percent figure of the previous month and nonfarm payroll employment will rise by 220,000. Companies responsible for some of the largest job cuts in the 1990s hired more workers than expected last year, signaling economic growth with mild inflation pressures, according to a survey released last week. Challenger, Gray & Christmas, Inc., an international employment firm, said five U.S. corporations that it surveyed hired a total of 63,800 employees in 1996, or 39 percent more than the 46,000 they projected last May ....Together they have cut almost 250,000 jobs since 1993. The 63,800 new hires in 1996 represent 26 percent of the number of job cuts announced ....(Washington Post, Feb. 2, page H12). Telemarketing finds a ready labor market in hard-pressed North Dakota, says the New York Times (page A10). Telecommunications businesses are transcending geography, searching the outback for pockets of hard-working, well-educated people to make hotel reservations, take orders for catalogue companies, process corporate expense accounts, or handle panicked calls from owners of new computers. Omaha has become the "toll-free capital" of the nation, with tens of thousands of people there working in telemarketing. In South Dakota, 5,000 people process credit-card transactions, making that the state's largest industry. In North Dakota, the explosion of the telecommunications industry has been so sudden, with thousands of jobs added in the last two years, that planners say it may be the way to stop a long-running brain drain ....
