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 recession. 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 recession. 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 third quarter." A recession traditionally is defined as an actual decline in gross national product for two successive three-month quarters. 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 this year. 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 January-March. 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. Nicaraguans 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 war-shattered nation. "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 nes! by Eugene O'Neill Po-werCenter POWER CENTER Box Office opens at 6pm, 763-3333. Mich. Rep. Ticket Office in Mich. League Mon-Fri. 12-5pm, 764-0450. Tickets olso ovoil- able through Hudson' TOMORROW: 2pm: Much Ado About Nothing - pm Wddlng.Snd .. welcome 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 SEATS , PG PARENTAL.GUIIANCE SUGGESTED 0 - ARE LIMITED SouEOM TEuL MAYuuyTeEsuiTAeiLE OR CnciDRE FIRST COME, FIRST 1979 TWENTIETH CENTURY-FOX the ann arbof rtlm co-op presents a FREE advance screening MONDAY,.July 23 at 7.0 pm in Aud A, Angell Halt. BREAKING AWAY is a contemporary ;comedy about bicycle racing directed by Peter Yates (THE DEEP, BULLITT). . .w.... ,,. .... ,..' 4 I .... u,. .