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Economic growth slowed dramatically in the first quarter of 1994 because of winter storms and the California earthquake but remained stronger than anticipated, the government said Friday.

The Commerce Department said the economy expanded at a healthy 3 percent annual rate - down from the booming 7 percent rate for the final three months of 1993 but more rapidly than the government estimated a month ago.The stock and bond markets, worried about inflation and rising interest rates, fell after the report. And analysts admitted they were scratching their heads over the continued strength of consumer buying and an unexpected rise in domestic government spending.

"It was stronger than I anticipated," said economist Sung Won Sohn of Norwest Corp. "People were getting cabin fever in January and February and decided to go out and enjoy life in March."

But analysts said the economy still is slowing from the torrid pace at the end of last year and, with higher interest rates, will slacken further in the latter half of 1994.

Growth was 2.9 percent in the third quarter of 1993 and 3 percent for the full year.

Today's increase in the gross domestic product was revised upward from last month's 2.6 percent estimate for the first quarter of 1994. Most economists had anticipated a downward revision, believing the previous estimate overstated growth.

The Commerce Department said higher consumer spending, government purchases and net exports more than offset a downward revision in business inventories.

The eye-popping growth that closed out last year - the highest since the start of 1984 - played a big part in prompting the Federal Reserve to boost short-term interest rates four times this year.

Economists insist most signs point to modest expansion this year, particularly after the full effects of the Fed's latest interest rate increases are felt.

The winter chill and devastating California quake in January severely dampened growth, contributing to a slower pace in housing and business construction and a sharp drop in business profits.

The Commerce Department reported that after-tax corporate profits to an annual rate of $284.9 billion, down 3.7 percent from the last quarter of 1993 following a 7.9 percent increase over the previous three months.