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1993 EXPECTED TO BE ROLLER COASTER YEAR FOR ECONOMY, DESPITE STRONG FOURTH QUARTER

 CHARLOTTE, N.C., Feb. 1 /PRNewswire/ -- The U.S. economy in 1993 is likely to be another roller coaster year, with ups and downs as in 1992, but within a higher range of GDP growth, First Union's chief economist said today.
 Real GDP in the fourth quarter increased at a 3.8 percent annual rate -- up from 3.4 percent in third quarter -- spurred by strong consumer spending. Consumer spending, after adjustment for inflation, jumped to a 4.3 percent rate. That followed a solid increase in consumer spending of 3.6 percent in the third quarter.
 "This upswing in consumer spending is the third attempt to get a normal recovery under way since the recession ended in March 1991," said First Union Chief Economist David Orr. "Normally, the increased spending causes producers and retailers to hire more employees, creating more income, which in turn leads to more spending -- a cycle of self-reinforcing upward momentum. In this recovery, however, the cycle has been interrupted twice because not enough jobs were created in response to the spending increases."
 Over the past 12 months, retail sales have increased 8.1 percent, while personal income has grown only 5.4 percent, and employment by only 0.5 percent. Orr said the discrepancy has resulted from several factors: a reduction in tax withholding, a high level of mortgage refinancing, and most recently, increased optimism about the economy's outlook, combined with spending of Hurricane Andrew insurance proceeds.
 Lack of job creation has again put the economy at a turning point, Orr said.
 "Something has to give. Either we get solid job growth or we will experience another mini-cycle' in 1993 -- a temporary economic slowdown followed by another uptick," Orr said. "Early 1993 job growth probably will not be sufficient to sustain this level of consumer spending. Therefore, first-half GDP growth will drop back into the 2 to 2 1/2 percent range, followed by a return to the 3 percent-plus range in late 1993 as the Clinton stimulus program of $20-$30 billion kicks in.
 "It looks like 1993 will be another roller coaster year, similar to 1992, bua?t a higher level of business activity," he concluded.
 Other key highlights among government figures for recent months are:
 Employment/Unemployment -- New jobs averaged 71,300 per month in the fourth quarter, up from 24,700 in the third quarter. While that is certainly better than the average monthly loss of 46,000 jobs in last year's fourth quarter, it is still only 0.8 percent at an annual rate. The unemployment rate in December was 7.3 percent, compared with 7.7 percent in June and 7.1 percent last December.
 Consumer Spending -- The fourth quarter annual rate of retail sales growth was 11.5 percent, far in excess of the 3.0 percent annual rate of inflation. Autos sold at a 6.4 million annual rate in the fourth quarter, up 6.5 percent from the third quarter annual rate, and up 5 percent from fourth quarter 1991. Light truck and van sales, however, soared to a 4.7 million annual rate in the fourth quarter, an astounding 57 percent rate of gain from the third quarter, and up 27 percent from the fourth quarter of 1991. The University of Michigan's Consumer Sentiment Index was 91.0 in December, an enormous jump from the 75.6 level in September and 68.2 last December.
 Housing -- Single-family housing starts in the fourth quarter averaged an annual rate of 1.1 million, up 8.1 percent from the third quarter rate and 19.2 percent above last year's fourth quarter. Multi-family starts averaged an annual rate of 154,000, down 8.7 percent from the third quarter and down 11.5 percent from fourth quarter 1991. Existing home resales in December were at the highest since May 1979, and were 21.5 percent above December 1991. The median price was $103,900, up 3.6 percent compared with December 1991. New home sales in November, on the other hand, were 2.3 percent lower than November 1991. For the year-to-date, however, sales were 19 percent higher than the first 11 months of 1991. The median price of $128,800 was 8.7 percent higher than November 1991.
 Industrial Production -- Fourth quarter factory output rose at a 5.8 percent annual rate and was 2.9 percent higher in December 1992 than in December 1991. By industry, the last 12 months saw the following changes: furniture, up 0.3 percent; textiles, up 5.3 percent; apparel, down 1.5 percent; tobacco, up 15.7 percent; office equipment and computers, up 21.2 percent; and aerospace, down 8.1 percent. Auto, light trucks and vans were assembled at a 10.7 million annual rate, leaving room for some increase since sales were at an 11.1 million rate. December capacity utilization was 79.3 percent, compared with 78.6 percent in September and 78.7 percent in December 1991.
 Inflation -- The Consumer Price Index in December was 2.9 percent higher than December 1991. Excluding food and energy, the "core" inflation rate was 3.3 percent, the lowest since 1966 (except for the price control years of 1971-72). The cost of owning and maintaining shelter rose 2.6 percent. Similar increases were: clothing, 1.4 percent; new cars, 2.3 percent; and food, 1.6 percent. Even the toughest areas improved somewhat, with medical care CPI up 6.6 percent in 1992 versus 7.9 percent in 1991, and education costs up 6.9 percent compared with 8.4 percent in the prior year.
 Trade Deficit -- The monthly average deficit in October/November for merchandise trade was ($7.4) billion compared with ($5.9) billion in the same two months last year. November exports were 2.8 percent above November 1991, while imports were up 10.8 percent. November exports to developed countries, which account for 58 percent of the total, fell 4.1 percent. Exports to developing countries, which are 38 percent of the total, rose 9.3 percent. Exports to China, Russia, and East Europe, which are 4 percent of the total, rose 30 percent, compared with November 1991.
 U.S. Dollar -- In December, the dollar was 7.2 percent higher than in September and 5.9 percent higher than December 1991 when compared with a weighted average of major trading partners. Compared with the German mark, the dollar ended December at 1.62, up 14.9 percent from the end of September, and 6.8 percent higher than a year earlier. Compared with the Japanese yen, the dollar ended December at 124.8, up 1 percent from the end of September and unchanged from a year earlier.
 Oil Prices -- The price of West Texas Crude was $19.50 a barrel at the end of December, having declined 10.3 percent from the end of September, but 2 percent higher than a year earlier.
 Interest Rates -- The prime rate was 6.0 percent in December, compared with 6.0 percent in September and 7.0 percent last December. Ninety-day Treasury Bills averaged 3.25 percent in December, compared with 2.97 percent in September and 4.12 percent in December 1991 (discount rate basis). Thirty-year Treasury Bonds averaged 7.44 percent in December, compared with 7.34 percent in September and 7.70 percent in December 1991. Mortgage rates (30-year fixed) averaged 8.22 percent in December, compared with 7.92 percent in September and 8.5 percent in December 1991. High-quality, long-term municipal bonds averaged 6.22 percent in December, compared with 6.25 percent in September and 6.69 percent in December 1991.
 At Dec. 31, 1992, First Union Corporation (NYSE: FTU FTUpr) reported assets of $51.3 billion, and operated 896 banking offices in Florida, North Carolina, South Carolina, Georgia and one banking office in Tennessee, 45 savings bank offices in Virginia, Maryland, the District of Columbia and Florida, and 190 nonbanking offices in 36 states and the District of Columbia. When pending acquisitions have been completed during the first half of 1993, the corporation will operate approximately 1,300 banking offices and have assets of approximately $66 billion, based upon Sept. 30, 1992 assets, making it the nation's eighth largest bank holding company.
 -0- 2/1/93
 /CONTACT: (Media) Sandy Deem of First Union Corporation, 704-374-2710/
 (FTU)


CO: First Union Corporation ST: North Carolina IN: FIN SU: ECO

MM -- CH004 -- 1400 02/01/93 13:01 EST
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Date:Feb 1, 1993
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