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PNC: INTEREST RATE DROP BOLSTERS CASE FOR EXPANDING ECONOMY

 PNC: INTEREST RATE DROP BOLSTERS CASE FOR EXPANDING ECONOMY
 PHILADELPHIA, July 27 /PRNewswire/ -- The most recent decline in interest rates bolsters the case that the economy will continue to expand, analysts at PNC Financial Corp (NYSE: PNC) said today.
 In their investment policy statement for August, the analysts cited other factors that point to sustained recovery:
 -- The index of leading economic indicators has risen for five straight months.
 -- Inventory depletion and current production schedules indicate that auto production will add slightly more than 1 percent to economic growth in the third quarter.
 -- Retail sales rose five-tenths of 1 percent in June.
 -- Banks are in much better shape than they were a year ago, and they are more willing to lend money to consumers.
 The analysts said the recent decision by the Federal Reserve to lower the discount rate to 3 percent and the federal funds rate to 3.25 percent "only cements further the case for a stronger economy."
 The investment policy statement said lower rates will allow corporations to replace higher yielding debt with lower yielding debt. In addition, consumers will continue to reduce their debt and replace mortgages made at higher rates with either the lowest mortgage rates in 30 years or with adjustable-rate mortgages made at favorable yields. With home financing more affordable, home sales should increase and boost the economy.
 The analysts said the economy should show growth of 2 percent, on an annual basis, for the quarter that ended in June. The second half of the year should see improvement, to an annualized rate of 2.5 percent to 3 percent.
 The analysts also said investors should not be unduly pessimistic about stocks. "The economy continues to recover, liquidity remains ample, earnings trends are still positive and short-term interest rates have reached levels not seen in 25 years," the statement said. "These are the critical focus points for equity investors."
 The analysts added: "Despite the skepticism that tends to underlie a lot of investment thinking these days, there are stocks worth investing in -- those of companies that are moving ahead and doing things right. Not every company is in a perpetual restructuring mode. Many have invested in their employees and assets and hence are well- positioned for growth in this economy cycle. Companies with these characteristics should be the successful investment stories of the next several years."
 PNC Financial Corp, headquartered in Pittsburgh, is the nation's 13th largest bank holding company, with assets of $45.5 billion. It operates approximately 500 community banking offices in Pennsylvania, Kentucky, Ohio, Indiana and Delaware and conducts business through additional offices in 16 states.
 PNC's principal banking affiliates include: Pittsburgh National Bank, Pittsburgh; Provident National Bank, Philadelphia; Citizens Fidelity Bank, Louisville, Ky.; Central Trust, Cincinnati; Bank of Delaware, Wilmington, Del.; Northeastern Bank, Scranton, Pa.; Marine Bank, Erie, Pa.; PNC National Bank, Wilmington; Hershey Bank, Hershey, Pa.; and The First Bank and Trust Company, Mechanicsburg, Pa.
 -0- 7/27/92
 /CONTACT: Linda Wolohan of PNC Financial's Provident National Bank, 215-585-5453/
 (PNC) CO: PNC Financial Corp ST: Pennsylvania IN: FIN SU: ECO


LJ-JS -- PH004 -- 3617 07/27/92 15:22 EDT
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Publication:PR Newswire
Date:Jul 27, 1992
Words:520
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