The Michigan Daily-Saturday, July 21, 1979-Page 9
GNP drop marks mild recession
WASHINGTON (AP) - The nation's
economic output plunged sharply in the
second quarter this year, marking the
start of what Commerce Departnent
officials said yesterday would be a mild
Production of goods and services fell
at an annual rate of 3.3 per cent from
April through June, the largest quar-
terly drop since the depths of the 1974-75
Output had risen 1.1 per cent in the
first quarter of 1979, the report said.
MOST OF the decline in gross
national product - the value of all the
U.S. goods and services produced after
the effects of inflation are taken into
account - was blamed on a slump in
automobile and gasoline sales.
Meanwhile, the -Federal Reserve
Board announced it was raising the in-
terest rate charged on its loans to
member banks from 9.5 per cent to a
record 10per cent.
The increase, the first since the dollar
rescue program was announced Nov. 1,
was intended to counteract rapid ex-
pansion of the U.S. money supply and to
dampen credit demands.
COURTENAY Slater, chief
economist for the Commerce Depar-
tment, said at a news conference,
"there are underlying strengths in the
economy which cause us to believe that
the recession will be of limited
magnitude and fairly shortduration."
Even if auto and truck sales pick up
in the next few months, she said, the
nation "would still see some drop in
overall gross national product in the
A recession traditionally is defined as
an actual decline in gross national
product for two successive three-month
THE CARTER administration had
been predicting the economy would
grow a modest 2.2 per cent this year,
compared with last year's newly
revised growth figure of 4.8 per cent.
Last week, the administration
acknowledged what private economists
have been forecasting for weeks: that
the economy will fall into recession and
show a decline of 0.5 per cent in output
The recession could cost more than
one million workers their jobs by the
end of the year, and inflation is expec-
ted to exceed 10per cent.
IN FACT, THE Commerce Depar-
tment report shows inflation up in the
April-June quarter to 9.9 per cent, com-
pared with a rate of 9.3 per cent in
The department said that before ad-
justment for inflation, gross national
product totaled $2.33 trillion in the
second quarter, up $35.1 billion or an
annual rate of 6.3 per cent from the first
quarter. After inflation adjustments,
however, gross national product
showed an $11.8 billion drop.
"Though spread throughout most
sectors of the private economy, this
decline was centered to a very large ex-
tent in the automotive sector, under-
scoring the sensitivity of our economy
to changes in petroleum prices and
availability," Slater said.
MANAGUA, Nicaragua (AP) - of Le
Hundreds of thousands of jubilant ride t
Nicaraguans welcomed their new five- renan
member ruling junta to Managua huge
yesterday in a joyous explosion of dinist
cheering, flag-waving, and wild firing
of guns into the air. Boi
Junta member Sergio Ramirez Mer- estim
cado proclaimed: "We have buried the civil
Somoza government forever."
The five leaders - two Marxist
guerrillas, a writer, an industrialist and
an opposition leader's widow - rode
down city streets to the main plaza,
where they were greeted and hugged by
Sandinista guerrilla commanders
Tomas Borges and Eden Pastora.
The new government said it would
repulse any foreign military interven-
tion as it labored to reconstruct the
"We don't want foreign intervention
because it has already cost a lot of
blood," said Borges, the new minister
of the interior.
More than 10,000 persons died in the
Sandinista's final seven-week offensive
to topple now-exiled President
Anastasio Somoza and end his family's
rule, which began in the 1930s following
a U.S. Marine occupation of Nicaragua
in 1930. The rebels completed their
takeover of Nicaragua early Thursday
when hundreds of guerrillas swarmed
into this capital city as it was aban-
doned by fleeing national guardsmen.
The junta members flew or drove in
from the south or from the norther city
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on, then assembled for the victory
to the old Plaza of the Republic,
ned Plaza of'the Revolution, past
crowds and red-and-black San-
a flags lining the streets.
rges told the plaza throng
ated at 250,000 that although the
war had ended, "Now comes a
5-member ruling junta
more difficult war - the reconstruction of Somoza's regime.
of Nicaragua." Pastora, known as "Commander
Zero," declared, "The revolution will
At the plaza ceremony, Ramirez an- not be betrayed!"
nounced decrees expropriating all Earlier yesterday, Ramirez, a 36-
Somoza family property and abolishing year-old writer who describes himself
the national guard. He said the San- as a democratic socialist, said there
dinistas are now the Nicaraguan would be "no executions" by the vic-
military, and said that signified the end torious rebels.
20th Century-Fox Presents A PETER YATES FILM "BREAKING AWAY"
DENNIS CHRISTOPHER DENNIS QUAID DANIEL STERN
and JACKIE EARLE HALEY also starring BARBARA BARRIE PAUL DOOLEY
introducing ROBYN DOUGLASS Produced andDirected by PETER YAES
Wrten by STEVE TESICH MuscAdapted by PATRICK WILUAMS
Conductedby LIONEL NEWMAN COLORBYDeUXE EADTAEVMRBK
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;comedy about bicycle racing directed by Peter Yates (THE DEEP, BULLITT).
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