Fort Lauderdale News from Fort Lauderdale, Florida • Page 7

nisi nees Fort Lauderdale Nes and Sun-Sentmel. Saturday. March S. 3B in brief Energy cost boosts wholesale prices as annual inflation rate nudges 20 Money supply falls by S2.8 billion; interest rates rise Oiti.ill prues al I he intermediate level were up 1 8 percent, compared Willi a 2 percent rise in Januaiy At the earliest or so called crude level ol product'. tn.

prices were up 2 6 percent in Febiuars alter (ailing 0 9 percent the month hctore The Producer Price Index, as the wholesale teport is ailed, stood at 23a 4 in February, which means that goods costing $10(1 in 17 cost $23;) 40 last month The two tenths ot a percentage point decline in the unemployment rate, which is one ol the clearest measures of eco noma- well being, suggested that the economy continues lo outperform expectations ol the Carter administration, which forecast a mild recession for Hie lirst half ol The adminisiialion is supporting tight fiscal and monetary policies designed (o cool down the economy and lower the inflation rale at the tost of higher unemployment, which government economists still predict will leach 7 5 percent before the year is over January's jobless rate of 6 2 percent was the highest in 18 months Hctore that, the rate had (liictualed between 5 7 percent and 5 9 percent since mid 1978 The government said the number ol jobless Americans fell February by aout HH.tMIO lo 6 3 million, while the number of people holding jobs rose by a modest 149.000 to 98 million During the past 12 months, employment has increased by 1 ft million jobs the smallest annual gam in more than four years The Labor Department said changes in the jobless rates between January and February were insignilicant for (he following population groups adult men, down I rom 4 7 to 4 6 percent, adult women, down from ft 8 to 5 7 percent, whiles, down from 5 4 lo 5 3 percent; noil hiles, down from 118 to 115 percent, teen agers, up from 16 3 to 16 5 percent, and minority teen-agers, up from 34 6 percent to 37 9 percent acceleration ol inflation. from thi t)iiiut's cnl in the I nittd Mat'" I iToiiomi-l terest rates The report translated into an 18 percent rise on a full year basis The rise in consumer prices sent off alarm bells in the administration and Congress and prompted new efforts to balance the 1981 federal budget by eliminating up to $20 billion in proposed spending The government's latest reports showing further rises in prices and a decline in unemployment were likely to bolster the. drive to cut social programs, such as public jobs for the poor, in the name of curbing inflation. The Labor Department said wholesale prices for energy products jumped 7 5 percent in February, the largest increase for one month since March 1974, when the country was in the grips of the Mideast oil embargo. During the past year, wholesale prices for gasoline, home heating oil and other energy goods have gone up 76 percent.

Wholesale food prices, meanwhile, declined 0 5 percent in February, following a 0 8 percent drop in January. However, there were signs that the drop in food prices at wholesale would not continue much longer. Food prices at the intermediate level of production the stage before wholesale jumped 5 5 percent in February after declining 2 7 percent in January The sharp rise in intermediate-level food costs last month was due to a 3'J percent rise in prices for refined sugar Energy costs at the intermediate level rose 4 5 percent in February, about (he same as in January. Congressman ring out a warning lo Japan's automakers II VIv By Owen I'llmann Tlw AvMNMird Prr WASHINGTON The biggest leap in energy costs since 1974 sent wholesale prices surging at nearly a 20 percent annual rate for a second straight month in February, the government said yesterday, and inflation-wary banks boosted prime lending rates to a record 18 percent The government's latest sign that inflation is worsening came as the Carter administration was trying frantically to fashion a new inflation-fighting strategy. At the same time, the government reported that the nation unemployment rate edged down from 6.2 percent to 6 percent in February.

The Labor Department said its index of price increases at the wholesale level the stage just before goods reach consumers rose 1.5 percent last month after climbing 1.6 percent in January. At that rate, wholesale price inflation tor the full year would hit 20 percent, surpassing the record 18.3 percent set in 1974. Wholesale prices rose 12'z percent last year The February increase, as in January, was paced by near-record rises in energy costs that more than offset a decline in wholesale food prices for a second consecutive month. Major banks, meanwhile, were setting records by raising interest rates for their best corporate customers, first from 17' i percent to 1734 percent, then to 18 percent. Some Carter administration economists insisted yesterday that despite the new reports showing an acceleration in last year's 13 rate, they were confident that a recession was at hand and it would douse the fires of inflation later this year.

"I do not see a longer-term acceleration of inflation," said William Cox, deputy chief economist for the Commerce Department. "The economy is peaking i UAW chief Douglas Fraser warning Oil, precious lead market's Nrw York Tines NEW YORK Depressing economic-news sent the stock market broadly lower yesterday in accelerated trading with the oil and precious-metal issues the biggest losers for the second consecutive session. The Dow Jones industrial average, which was in the minus column throughout the day, closed off 7.51 to 820 56, For the week the blue chip barometer lost 42.58 points as a result of rising interest rates and continued Wall Street concern over the Inflationary spiral. On Thursday, the Dow dropped 16 81 points, its biggest one-day decline since Feb. 21 when it fell 18 34 points.

The weakness on the New York Stock Exchange yesterday was across-the-board with losers outnumbering winners by more than a 3-to-l ratio. The other two leading market barometers also declined sharply last week. The New York Stock Exchange's index of all the common stocks listed on the exchange tumbled 3 99 points to 60 96. Its lowest close since the week ended ended Jan. 3 when it finished at 60.34 Standard Poor's 500 stork indux ended the week off 6.76 points to 106.90, its biggest weekly drop since the week ended Oct.

12, 1979 when II fell 6.78 points The market opened lower on the report from the Labor Department that producers prices in February rose 1 5 hi i 1 6 I do not it a loncr-lt rm Tin- t'conoinv i- pvakiiif; oul and mm a iticsion economy Ff out from this business cycle and wo will see a recession in the United Slates' economy soon However. Nancy Barrett, an economist and deputy assistant secretary at the Labor Department, said the new reports suggest "that perhaps we are not tumbling into a recession as quickly as we thought and that inflation is worsening At the White House. Charles I. Schultze. chairman of the President's Council of Economic Advisers, said discussions with Congress are going on "practically round-the-clock" to develop a new strategy aimed at keeping inflation from keeping worse.

Schultze said the effort will focus on a "re-evaluation and substantial tightening" of the 1981 budget that President Carter sent to Congress just six weeks ago. But he refused to say that means balancing the budget. "It's clear we are prepared to take tough action and stick with it." he said, but he reaffirmed the administration's opposition to mandatory wage and price controls. "Again, I say for the 85th time, they are not coming," he declared He said unless steps are taken to dampen an inflationary psychology in the nation, "we face a very serious worsening of inflation." The first signs of an accelerating inflation rate came two weeks ago, when the government's Consumer Price Index recorded a 1.4 percent jump in January, mainly because of record jumps in energy prices and steadily climbing in Japan automakers to curb exports to U.S. metals plunge percent compared with a 1 6 rise in January.

The modest decrease was further evidence that inflation was not abating. Shortly thereafter the market received another jolt, when Citibank and a number of other banks raised the prime interest rate they charge their most creditworthy corporate customers for loans a half-point to a record 1 7 percent. One institution, the Harris Hank Trust of Chicago went a step further and hiked its rate to 18 percent. Only three weeks ago the basic charge on blue-chip loans was 15 'a percent. Alan Af kerman, director of foreign research of Herfold Stern, commented that whether the recent selling excess is nearly at an end is hard to say However, he added, at this level energy and selected stocks continue to 'improve in value as long-term inflation hedges.

Turnover on the exchange continued strong and rose lo 50 9 million shares from 49 6 million shares the day before The oil issues continued under pressure for the second consecutive session on profit taking following their sharp advances in recent months, Mobil, the second most actively-traded issue, which was down 71 on Thursday, fell 5 to Gulf Oil, 3'i to 46 Superior Oil, 3 to 152'2, Sun Oil, 3 to Atlantic-Richfield. 3 to 92, Marathon Oil, 3' to 60, Union Oil of California. 2 to and Exxon, 2' lo Bl, It was no different on the Arneruan Stock Exchange where the energy group dropped sharply I vW THE NATION'S basic money supply known as Ml-A fell $2 8 billion in the latest reporting week following a $1.1 billion surge the week before, the Federal Reserve Bank of New York reported yesterday, while key interest rates were sharply higher. Commercial and industrial loans at major New York City banks fell $458 million in the banking week ended Feb. 27 compared with an $85 million gain the previous week.

However, there now is a two-week lag in the business loan figures reported by the Fed. and market sources say that demand soared this week despite record high interest rates. Big businesses drew down credit lines with banks either anticipating that sort of controls would be part of the Administration's anti-inflation package, or because of the turmoil in the money markets that has virtually dried up funds in some areas. The monetary aggregates, even with the latest drop, remain well above the Fed's presumed target level of around 4 "2 percent for the basic money supply. In the latest for weeks, Ml-A averaged a 7 2 percent rate of gain for the statistical quarter.

Ml-A, the total of checking accounts and cash in circulation, was a seasonally-adjusted $374.7 billion in the week ended Feb. 27 compared with $377.5 billion the previous week. The broader measure known as Ml-B averaged a seasonally-adjusted $391.2 billion in the week, down $2.9 billion from $394.1 billion the week before. Key interest rates were sharply higher. Federal funds, the uncommitted funds banks and corporations lend each other, averaged 16.17 percent, up from 14.62 percent the week before.

The average three-month Treasury bill rate was 14.62 percent compared with 13.63 percent. The rate on certificates of deposit, which many banks use to determine their prime rate, was 15.97 prcent versus 15.30 percent the previous week. UAW is not impressed PRESIDENT CARTER'S inflation fighters told Ford Motor Co. yesterday that its new union contract did not comply, with anti-inflation guidelines, but the United Auto Workers said it wasn't taking it seriously. The Council on Wage and Price Stability said Ford used its own base pay rate, instead of the lower industry average as, it should have, to calculate the average salary increases for its 197,000 workers.

Also, Ford "incorrectly costed the increases in pension and health and welfare benefits" and "erred" in calculating the value of cost-of-living adjustments and supplemental unemployment benefits. UAW President Douglas A. Fraser said in Washington that Alfred Kahn, chairman of the council, "can't measure anything, let alone the Ford-UAW agreement. Their rules are so confusing we really don't take seriously anything Kahn says," Fraser added. Earlier, General Motors which provided the base for Ford's UAW settlement, and the rubber industry agreed to hold down price increases.

The council said price restraints would bring their settlements within trie guidelines. Chrysler hoosts prices CHRYSLER CORP. boosted the sticker price of its hot-selling domestic and some imported subcompacts yesterday, the third increase of the model year for those vehicles. The price in- creases range from $17 on its two-door Plymouth Arrow hatchback, imported from Japan, to $230 on its own Horizon four-door subcompact. Chrysler also said it raising destination charges on all its cars and trucks by $15 to offset increased transportation costs.

The price hike is effective immediately, but will not apply to affected models now in stock, Chrysler said. The action will hike the bottom-line price of an Omni or Horizon two-doo $115 to $5,515. Four-door models will increase $230 to $5,360 from $5130. Chrysler said the price hike, on small cars it imports from the Japanese automaker Mitsubishi Motors Corp. and sells under its own name averages $69 or 1.2 percent.

The increase applies to all Mitsubishi products except the Dodge Challenger, Plymouth Sapporo and Dodge Colt Wagon. Housing sales slump SALES OF EXISTING houses across the country continued to slump in January as record high interest rates drove potential homebuyers out of the market, says the National Association of Realtors. The Realtors reported that existing house sales ran at an annual rate of 3.21 million, down 4 percent from December's 3.35 million level. Since October 6, when the Federal Reserve Board initiated its tight credit policies, existing home sales have plummeted 17 percent, said Jack Carlson, chief economist of the Realtors' group. Despite declining sales, the price of existing homes are "holding up remarkably well," said Carlson.

The median price of an existing house in January rose $1,400 to $57,900. That's J1.3 percent higher than in January 1979 somewhat less than last year's 13.3 percent inflation rate. So far in 1980, the annual inflation rate is running at 18 percent. The Realtors' report monthly on existing house sales and prices. The federal government issues figures on new home purchases; its next report is due Monday.

Hasics opens third store THE GRAND UNION Company will open its third South Florida Basics Food Warehouse, the second in Broward, tomorrow at 3108 University Drive, Miramar. The new store, billed as a "no-frills" supermarket, will stock more than 3.000 different items in the grocery, mean, delicatessen, produce and general merchandise lines. The store chain boasts that shoppers can expect to receive up to 30 percent more merchandise for their food dollars because the store does not provide services normally found in a traditional supermarket. The company ajso has stores In Sunrise, which opened in September, and one in Hialeah. Several additional sites are currently being studied in Florida as possible locations lulled I'n'hH Inlrrmitlofijil WASHINGTON A group of congressmen warned yesterday il Japan does not voluntarily cut back auto exports to the United Stales, "a wave of protectionism will sweep across this country" and damage both nations.

Testimony at the first in a series of congressional hearings on the world auto market included some patriotic and anti-Japanese talk, mostly from Michigan congressmen. They suggested legislation clamping tough import, quotas on Japanese cars unless a substantial number are built in the United States with American parts. United Auto Workers President Douglas Fraser, speaking at the hearing on behalf of 200,000 American autoworkers who have been laid off because of lagging American sales, called for an immediate voluntary Japanese cutback to 1977 levels of 12 percent of the U.S. market That should be followed by legisla AF )hol(i Interest rates will peak in weeks, experts say tion requiring a certain number of Japanese cars to be produced in the United Slates, he said Otherwise, said Fraser, Japan's "unfair exploitation could well result in an overreact ion of protectionism liul Fraser said hi' did not want to slop Japanese imports because their provides Hie Amer ican auto industry with "discipline and competition Chairman Charles Vamk, Ohio, of the House Ways and Means Trade subcommittee called Ihe legislalion a "last resort" which may not be needed if the Japanese "comprehend our message "There's a protectionist tide growing in the United Stales and it would be a mistake for those Henliiiients to succeed," he said "Hut unless they (the Japanese) put their money where the market is, they're in lor some difficulty The message will be heaid, because press seats in Ihe spacious hearing room were packed with Japanese reporters Granville, editor of the M.nkrt Letter, said the rally would be led by the stocks of companies "in depressed industries," such as I olaroid, Eastman Kodak, Genet al Motois, Ford and Sears Granville agreed with a forecast by Halph Goldman, a Fort Laudei.lale investment executive with Sl.earson Hayden Stone, who predicted (hi mat ki will exceed its 1973 peak of Kiai on the Dow Jones Industrial Average Goldman, sponsor of the four-day 1980 Investment Strategy Seminar, said the market, will rally when "individuals realize they need an annual increase in value of 30 percent just lo keep pace with inflation Although the bond market has been collapsing in recent weeks, Jack Egan, financial editor of New Yoik said bonds represent "one of the best opportunities facing investors in a long time Even conservatively, Egan said, investors ran realize a 15 percent annual rate of return and a 5 10 percent capital gain, on corporate bonds. While Hoeckh said it is still too early to buy bonds, since Interest rates have not yet peaked, he agreed that bonds will be one of the most "outstanding" invest merit opportunities in 1980 The investment seminar, which runs through tomorrow, has drawn some 800 investors Ir.ti around (he nation By Gary Klott Slafl writa-r HOLLYWOOD Interest rates will peak within a matter of weeks, agreed a number of celebrated financial experts who spoke yesterday al an investment seminar here "We are very close to a peak in short term inter-st rates," said Anthony Hoeckh, a leading authority on credit markets and editor of ll.ink Credit Analyst.

"They'll probably peak in March or shortly after." Short-term rates could rise another one-half to one percentage point before peaking, he said, and long term rates will probably not hit a peak until June. "Long-term rates typically peak out after short," he said, citing Britain's inflation experience where long term rates usually peaked three to six months alter the turn in short term rates, Long-term Treasury bond rales, which now are over 12 percent, could still reach 13" to 14 percent, Hoeckh added Joseph Granville, a technical market analyst, said the turn In interest rates will help poise the stock market for a major rally this year "A change in the Interest rate posture will bring billions of dollars hack into the (stork; market," he said He also predicted the "gold bubble will break," bringing billions of precious metal dollars into the market as well.