NATION/WORLD
UNIVERSITY DAILY KANSAN
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Friday, May 3, 1996
7A
GDP grows despite setbacks
Surge in economy may trigger hike in interest rates
The Associated Press
WASHINGTON — The economy is surging back to life, gratifying the White House but jolting Wall Street. Powered by heavy spending for business computers and consumer goods, growth accelerated to 2.8 percent in the first three months of the year in spite of blizzards, government shutdowns and a major auto strike.
The White House, hoping for a strong economy in an election year, was ecstatic, but financial markets tumbled, fearing the stronger-than-expected growth will force the Federal Reserve to start raising interest rates.
"This is plain and simple good news for the American economy and more evidence that the president's economic strategy is paying off," said Laura Tyson, chairwoman of President Clinton's National Economic
Council.
Private analysts agreed that the surprisingly strong increase in the gross domestic product — the nation's total output of goods and services — depicted a sizable rebound from a barely discernible 0.5 percent GDP gain in the fourth quarter of 1995.
"The economy is cooking," said Allen Sinai, chief global economist at Lehman Bros. in New York. "This report says business is terrific and life for American workers is going to be much better this year than last year in terms of job availability and higher pay."
While that is just what an incumbent president facing voters in November would like to hear, financial markets saw clear risks.
Investors fretted that the economy is growing too rapidly for the sixth year of an economic expansion and this will force the Federal Reserve to cool things off with higher interest rates.
The Dow Jones industrial average was down more than 100 points late in the day yesterday.
A huge selloff in the bond market
This is plain and simple good news...and more evidence that the
president's
economic strategy is paying off."
Economic Council
Chairwoman of Clinton's National Economist Council
pushed the yield on the benchmark 30-year Treasury bond above 7 percent, its highest level in a year.
"The market is clearly worried that the Fed will have to slam on the brakes," said David Wyss, chief financial economist at DRI-McGraw Hill Inc.
Wyss said that without the adverse
effects of the General Motors strike, the government shutdown and the snowstorms, the GDP would have expanded at a phenomenal rate of 4.4 percent in the first three months of the year, double the speed limit that Federal Reserve Chairman Alan Greenspan has set for sustainable, noninflationary growth.
Gasoline and food prices have been surging in recent weeks, but Tyson insisted that the administration saw no reason to change its forecast of steady growth and moderate inflation for the balance of 1996.
An inflation index tied to the GDP showed only a moderate pickup in the first quarter, rising by 2.5 percent, compared with a 2.1 percent increase in the fourth quarter.
Some analysts said the Fed could begin raising rates as early as their next meeting on May 21, but others said a rate increase would only come then if inflation showed signs of worsening dramatically.
Further information on the economy will come today with release of the unemployment report for April.
The jobless rate in March was 5.6 percent.
Police uncover satanic murder site
The Associated Press
SAN LUIS OBISPO, Calif. — Three Satan-worshiping high school boys drugged, raped, tortured and murdered a 15-year-old girl in hopes a virgin sacrifice would earn them a ticket to hell, prosecutors said yesterday.
Elyse Pahler's body was found last month at what prosecutors believe was an altar to Satan in a eucalypt grove outside of San Luis Obispo.
Jacob W. Delashmutt, 16; Joseph Fiorella, and Royce E. Casey, 17; were arrested March 14. They are
being held on charges of murder gang involvement, rape, torture and conspiracy.
Pahler disappeared July 22 and had been listed as a missing person until Casey came forward and led authorities to her body, Deputy District Attorney Dan Bouchard said. She was slain the night she left her house, Bouchard said.
According to Bouchard, the boys selected and stalked her believing that she was a virgin and that her sacrifice would earn them a ticket to hell.
The boys allegedly had a knife when they took Pahler to the apparent altar, which prosecutors would not describe.
Prosecutors refused to say how the
There, prosecutors said, she was drugged, a belt was put around her neck and she was raped and tortured.
According to court papers, the boys formed a musical band to glorify Satan. To enhance their musical ability to worship Satan and thereby earn a ticket to hell, they discussed the need for human sacrifice.
'ultimate sin' against God, (they) selected a virgin ... to sacrifice," prosecutors said.
"To glorify Satan and commit the
Casey's attorney Kevin McReynolds said, "A lot of the allegations are grossly overstated and some of them are flatly without any factual support whatsoever. Our view is that many of these allegations are intended to inflame public opinion and we look forward to the hearing."
A hearing is set for June 12 to determine whether the teen-agers will be tried as adults.
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