Economy Gained Steam At End Of 1996

The economy ended 1996 with a roar but little sign of inflation - a package that sent stock and bond prices modestly higher Friday as worries about higher interest rates eased.

The Commerce Department said Friday the gross domestic product grew an annualized 4.7 percent from October through December, matching the year’s second quarter, which was the strongest since a 4.9 percent rate in the spring of 1994.

As a result, the GDP posted a 2.5 percent gain for all of 1996, topping the 2 percent advance in 1995 that had been the slowest since a 1 percent drop in 1991 when the last recession ended. Analysts had expected a fourth-quarter rate of just 3.8 percent.

At the same time, a measure of inflation in the GDP report showed prices rose 2.1 percent last year, down from 2.4 percent in 1995. While the index rose at a 2.5 percent annual rate in the final three months, the advance was attributed to volatile energy prices.

Consumer spending shot up at a 3.4 percent rate, matching the second-quarter pace. Spending had inched up at an anemic 0.5 percent rate during the third quarter, the weakest performance in nearly five years.