The U.S. economy, overcoming blizzards, government shutdowns and a major auto strike, sprang back to life in the first three months of the year, growing at an annual rate of 2.8 percent.
The Commerce Department reported Thursday that the advance in the gross domestic product - the nation's total output of goods and services - represented more than a fivefold increase from an anemic 0.5 percent growth rate in the October-December quarter.The strength came in renewed consumer spending, particularly for computer products, which soared during the period, and in business investment. The Commerce Department said the first quarter GDP figure would have been an even bigger 3 percent without adverse effects from the blizzard and the partial federal government shutdown.
The increase was far above expectations and was certain to be welcome at the White House, where President Clinton's hopes for re-election rest in large part on convincing voters that he is dealing with their economic anxieties.
The administration has insisted better days are ahead for the economy following a prolonged slowdown in 1995 as it sagged under the weight of a string of interest-rate hikes engineered by the Federal Reserve to keep inflation in check.
After the economy threatened to topple into a recession, the Fed reversed course and cut rates in July, December and January.
As long as GDP growth remains above 2 percent, analysts said it is unlikely the Fed will lower interest rates further, especially amid signs inflationary pressures are starting to pick up again.
While gasoline and food prices have been surging in recent weeks, an inflation index tied to the GDP showed only a moderate pickup in the first quarter, rising by 2.5 percent, compared to a 2.1 percent increase in the fourth quarter.
The 2.8 percent GDP growth rate in the first quarter was the strongest showing since a 3.6 percent increase in the July-September quarter last year. However, that quarter represented the only bright spot in a year when GDP inched forward at rates of 0.6 percent in the first quarter and 0.5 percent in both the second and fourth quarters.
While it is uncertain whether the current rebound in growth will be sustained, many analysts are optimistic, pointing to a variety of reports showing strength in the current April-June period.
Just this week, it was reported that manufacturing companies, which have been in recession territory since last July, edged back into a zone reflecting slight growth in April. That is the third straight monthly increase, according to a closely followed survey by the National Association of Purchasing Management.
A key economic forecasting gauge, the Index of Leading Indicators, also posted back-to-back monthly increases, something that hasn't happened since the end of 1994.
The GDP report showed that consumer spending, which accounts for two-thirds of the total economy, expanded at an annual rate of 3.5 percent in the first quarter, far ahead of the modest 1.2 percent rate in the fourth quarter.
GDP increased at a rate of $47.1 billion in the first quarter. Of that gain, $39.4 billion came from the rise in consumer spending. The other big contributor was a rise of $18.7 billion in spending on business investment.
The Commerce Department said both the pickup in consumer spending and the rise in business investment reflected in large part increases in sales of computers and computer products.
Offsetting the strength, the country's trade deficit worsened during the first three months of the year, subtracting $14.4 billion from the GDP advance. In addition, cutbacks in business inventories cut growth by $8.6 billion.