US ECONOMY POSTS SURPRISING GAINS The US economy must have been feeding on spinach in the last quarter of last year because it was stronger than anyone expected. According to the Commerce Department, the fourth-quarter Gross Domestic Product (GDP), a broad measure of the nation's production of goods and services, surged by a 7.5 percent rate, higher than the 5.9 percent rate reported in an initial estimate a month ago. The strongest elements of the economy were consumer spending, business investment, and housing. In anticipation of the government's revision of the GDP, the bond market has been in turmoil, fearing further tightening by the Federal Reserve Board. However, March 1 bond prices opened without much change. Economist Donald Straszheim of Merrill Lynch & Co. anticipates the next Fed move will be around March 22, when the nation's central bank will hike rates by another 0.25 of a percentage point. Economists say the Fed is not under pressure because the latest GDP numbers indicate inflation is under control. Weaker markets abroad will also act as a drag on the US economy as export growth slows. In the fourth quarter, exports shot up at a 20.5 percent annual rate. Also yesterday, the Purchasing Managers Index which tracks manufacturing orders showed that the economy grew at a slower rate in February than in January. Sweden joins EU
Sweden clinched a deal March 1 to join the ranks of the European Union, and Finland was expected to follow suit within hours, diplomats said. Exhausted negotiators from four countries haggled through the night seeking terms with the 12-nation EU. Talks with Norway and Austria continue. Prisoners freed
Israel began releasing as many as 1000 Palestinian prisoners March 1, trying to save peace talks which the PLO suspended over the killing of Muslim worshipers by a Jewish settler. The 500 first released are the first of up to 1,000 prisoners the Israeli government had promised to release by the end of the Muslim fasting season, Ramadan. In related news, Israeli Prime Minister Yitzhak Rabin said March 1 that Israel would accept an international presence in Gaza and the West Bank town of Jericho, but not an armed international force. The Israeli leader rejected other PLO demands that settlements be dismantled and all settlers be disarmed. The PLO has demanded the international presence. Sun-Times sold
The Chicago Sun-Times, the 11th-largest daily newspaper in the US, will be bought by Canadian publisher Conrad Black for $180 million, he announced Feb. 28. The move gives Mr. Black, who previously tried to buy the New York Daily News, a long-sought base for his US subsidiary.