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. Last Updated: 07/27/2016

U.S. Economy Surging, Report Shows

WASHINGTON -- The U.S. economy surged at the sharpest pace in nearly a decade in the final quarter of 1993, the Commerce Department said, but a manufacturers' report showed the rapid growth spawning inflationary pressures in the new year.

In its first revision of fourth-quarter gross domestic product, the agency said Tuesday that output surged up at a 7.5 percent annual rate instead of the 5.9 percent rate estimated a month ago.

It was the strongest pickup in output since the first quarter of 1984, when the economy expanded at a 7.9 percent rate. The spurt was above economists' expectations for 6.9 percent.

The big revision occurred because of a better trade picture than was first thought and more spending over the holidays. The performance was accompanied by only moderate price rises.

But a separate report from the National Association of Purchasing Management -- reflecting far more current activity in February -- signaled a subsequent jump in price pressures.

While the purchasing managers found a slight slowdown in overall manufacturing activity last month from January, the price component of the index shot up to 67.0 in February from 59.8.

Bond market interest rates jumped to an eight-month high amid fears of resurgent inflation.

Analysts said the growth entering 1994 was a bonus because it means better job opportunities to offset damage from a rise in some interest rates. "The economy looks great, but it's so strong that potential inflationary pressures may be building up," said Allen Sinai of Lehman Bros. in New York.

The Federal Reserve already raised short-term interest rates on Feb. 4 and plans to do so again if necessary.

President Bill Clinton tried to dampen the markets' fears, emphasizing the report's two inflation measures -- the implicit price deflator and the fixed-weight gauge of price changes -- were virtually unchanged in the revision.

"I'm encouraged by the growth figures and by the fact that all the indicators are that there's no significant increase in inflation," Clinton said.