Dayton Daily News from Dayton, Ohio • 14

6 Dayton Daily Mmw Sat. Aug. 27, 1988 Business Personal income up, consumer spending down Journal of Business Personal Personal I Friday's market Spending Trons ol dotafs. seasonal adjusted 535 Trilions of dollars, seasonaty adjusied tt5 DOW 6.58 closed at 2,0 17.43 NYSE 0.30 closed at 147.24 AM EX 0.66 closed at 293.87 WASHINGTON (AP) Americans' personal incomes, bolstered by the biggest increase in wages in seven months, rose 0.6 percent in July while consumer spending slowed because of a drop in auto sales, the government reported Friday. The 0.6 percent increase in incomes was identical to the June advance and would have been an even stronger 0.8 percent if it had not been for a big drop in farm subsidy payments.

Spending on personal consumption, which includes virtually everything except interest payments on debt, rose 0.5 percent in July. While this was less than half the 1.1 percent June advance, economists said it showed that overall demand remained strong despite a decline in car purchases. As with other recent statistics, economists found signs of growing inflationary pressures in the report, primarily in a 1 percent gain in wages and salaries, the biggest rise in this key income component since last December. While rising incomes are normally viewed as healthy, economists have begun worrying that demand pressures securities dealer, said the personal income report showed that economic growth was showing no signs of slowing down in the July-September quarter, despite efforts by the Federal Reserve to dampen demand by pushing interest rates higher. He predicted further credit tightening in the months ahead.

However, White House spokesman Marlin Fitzwater called the report "good news." "The figures in the report are favorable, with steady income growth, good growth in consumer spending and in the personal saving rate," he said. The 0.6 percent rise in incomes in both June and July was the best showing since a 1 percent increase last March. Wages and salaries rose $24.5 billion in July, compared to an increase of $18.9 billion in June, with increases in manufacturing contributing $3.8 billion of the increase. The overall increase was offset by a $9 billion drop in farm subsidy payments, which are extremely volatile from month to month. are outstripping the economy's ability to produce goods, thus creating a classic recipe for rising inflation.

Those fears were heightened Thursday when the government reported the overall economy, as measured by the gross national product, was growing at a 3.3 percent annual rate from April through June, faster than previously believed, while a GNP price index shot up at the fastest rate in six years. "We have a lot of economic activity out there and it is generating a lot of jobs and spending power for American consumers," said Sandra Shaber, an economist with the Futures Group, a Washington consulting firm. She said that for the first time since the late 1970s, consumers appeared to be basing purchases on a belief they needed to act before prices went higher. "Up until recently, we have had enormous resistance to price increases, but I think we are beginning to see a buildup of inflationary expectations," she said. David Jones, an economist with Aubrey G.

Lanston a government NASDAQ 0.39 closed at 374.43 0.50 closed at 259.68 WILSHIRE $5.2 closed at $2,594,868 ASONO JFMAMJJ 1987 1968 ASONO JFMAMJJ Full report, Page 7B July 87 June 88 Juty 88 3 02 3.21 3 21 1987 1988 July 87 June '88 68 3.78 4X)5 4.07 WORLD Souce US Of KCoima Judge blocks firings Continues injunction for 4,000 at Eastern Toyota profits soar Toyota Motor Corp. reported that its profit after taxes surged 18.9 percent in its latest fiscal year from the year before. Dollar drops The central banks appear to have won the latest round in their bout to subdue the dollar, which finished lower against several key foreign currencies. China bans wood China has banned the use of wood in seven industrial and product sectors, including coffin manufacturing, to halt rising imports and ease the drain on depleting resources. Cocoa at low Cocoa futures prices plunged to their lowest level in 12 years on reports the International Cocoa Organization was considering drastic changes in the funding of its price-support operations.

NATION ASSOCIATED PRESS Wheel to succeed Ken Hill, senior designer for Matchbox Cars U.S.A. company itself is diminutive Matchbox sold 77 in Moonachie, N.J., works on sketches for 1989 mod- million vehicles last year, more than GM, Chrysler els of the company's diminutive line. Not that the and Ford put together. Sourm: US Of 0 Comntfc New engine passes test, GE reports EVENDALE, Ohio (AP) The General Electric Co. says its experimental unducted fan engine performed successfully during a test flight this week from California to England.

The GE engine, which uses turbine-driven, counter-rotating fan blades to reduce fuel consumption, was mounted on the left side of a McDonnell Douglas MD-80 test aircraft which flew Tuesday from Edwards Air Force Base in California to Farnborough, England. GE's Aircraft Engines Division, based in the Cincinnati suburb of Even-dale, said Thursday it is working on a production version of the unducted fan engine with GE's partner in the project, the French manufacturer Snecma. Snecma has a 35 percent share in the engine program. The unducted fan engine has two sets of fan blades which spin in opposite directions while the engine is operating. The fan blades are driven directly by a counter-rotating turbine without a gearbox.

GE officials say the unducted fan engine combines jet engine performance with the fuel savings of propeller-like assistance. GE finished ground-testing a second-generation model of the engine in July 1987 at the company's Peebles, Ohio, outdoor test facility. The MD-80 test aircraft made intermediate stops during this week's trip in Minneapolis, Gander, Newfoundland; and Keflavik, Iceland. It went to Farnborough to perform daily demonstration flights Sept. 4-11 at the Farnborough Air Show.

GE said the engine also performed up to the company's expectations during a series of 20 one-hour demonstration flights earlier this year aboard an MD-80 aircraft over Long Beach, Calif. During the MD-80 flights, the unducted fan engine used up to 25 percent less fuel than a conventional jet engine mounted on the other side of the aircraft, GE officials said. Let cars eat more, federal agency says WASHINGTON (AP) The Transportation Department on Friday proposed loosening the official minimum average gas-mileage for automakers' fleets by at least half a mile per gallon. The agency proposed setting the corporate average fuel economy, or CAFE, standard at between 26.5 mpg and 27.5 mpg for the 1989 and 1990 model years. The range is identical to or less than the 27.5 mpg mandated by Congress in the fuel economy program begun in 1975.

However, since the 1986 model year the department has set the CAFE standard at 26 mpg, so the proposed level would actually be more stringent than that now in effect. Senate panel says pressure put on Fed Reserve Board WASHINGTON (AP) A federal judge on Friday continued his order preventing Eastern Airlines from firing some 4,000 workers whose unions contend Eastern's parent is dismantling the financially troubled carrier to rid it of labor contracts. U.S. District Judge Barrington Parker said the Air Line Pilots Association, International Association of Machinists and Transport Workers Union, all of which filed a lawsuit, were entitled to a preliminary injunction. He said he would issue a detailed opinion by Tuesday.

John Gallagher, an attorney for Eastern, at a hearing Friday afternoon asked Parker for a clarification on his ruling that the three unions were "entitled to relief." Despite numerous efforts by Gallagher, Parker refused to elaborate on his ruling during the afternoon hearing. Gallagher said the ruling would be appealed. In essence, Parker continued the temporary restraining order he issued Aug. 4 prohibiting Eastern from firing the 4,000 but not preventing the company from curtailing service to 14 cities. Gallagher said the airline's September schedule, set to go in effect Wednesday, would save Eastern $50 million in the change of schedules and $7 million in salaries.

Capt. Jack Bavis, a representative of the Air Line Pilots Association, called the judge's decision "a victory for 40,000 Eastern employees. For once, justice is working for the little people, not just the big people." Jonathan Cohen, an attorney for the pilots association, also hailed the ruling. "We know now that at least the temporary restraining order will be extended, that means 4,000 jobs," he said. "But he (Parker) said he is considering other issues.

The TRO is the minimum. We are optimistic." Earlier, Karen Ceremsak, a spokeswoman for the Miami-based Eastern airline, said the company believes the unions "are not entitled to relief of any sort and we expect we will be filing an appeal at the appropriate time." Eastern, which has lost about $1 billion over the past 10 years, posted a second quarter net loss of $89.8 million, compared with net income of $27.1 million a year earlier. Eastern's revenue in the most recent quarter declined to $1 billion from $1.2 billion. The Eastern plan, announced July 22, also calls for elimination of 140 of its 1,225 daily flights to help cut costs. Boeing falls behind An $800 million contract to put new wings on the Navy's aging A6-E attack jets has fallen nine months behind schedule, Boeing Military Airplanes has confirmed.

Copper going up After slipping for several weeks, copper prices have begun to rebound again because of a renewed tightening of supplies brought on in part by copper workers' strikes in Peru and Canada. Macmillan says no Takeover target Macmillan Inc. said its board has determined that the $2.34 billion tender offer, $80 per share, launched earlier this month by Maxwell Communications Corp. is inadequate. Griffin stymied Resorts International adjourned a special stockholders meeting because not enough votes were cast SO approve entertainer Merv Grif-ift's offer to acquire the gaming and real estate company.

USAir near pact After months of wrangling that included a job action that forced 170 flight cancellations, USAir and its flight attendants' union have hammered out a tentative agreement on wage parity for former Pacific Southwest Airlines attendants. More youths working Young workers this summer are experiencing the lowest unemployment rate since 1 969 with a record 68.5 percent of the nation's youths holding jobs, the Labor Department said, but all the improvement was among whites. Lorimar sells station Lorimar Telepictures producers of Dalas and Knots Landing said it has agreed to sell WPGH-TV in Pittsburgh to the owner of stations in Hartford, and Miami. Adapters defective Radio Shack is recalling outlet adapters, sold since 1 987 for use in operating electrical appliances overseas, because the adapters may pose a shock hazard, the Con the recommended direction, or acting in a direction contrary to the suggesting of the administration, in an effort to preserve the Federal Reserve's reputation for independence." "The problems of political independence are particularly acute at the present time when all members of the board of governors were appointed by the Reagan administration," the report said. The report described as "somewhat diversionary" attempts "by some within the administration" to blame the crash on the Fed's slow-growth policy preceding October 1987.

It said slow growth was a result of an agreement between the Fed and the administration made necessary by the 1987 Louvre Accord between the United States and six other major industrial nations. The accord was aimed at stabilizing the dollar after a two-year lowering. "The administration is therefore jointly responsible for the slow rate of money growth and any of the resulting consequences," the report said. "Attempts to single out the Federal Reserve as the scapegoat for the stock market crash or any of the consequences of the slower than normal growth in the money supply are therefore incredible." port's contention. "We are not doing that," Fitzwater said.

"The Banking Committee is wrong. The Fed is independent. We are not applying pressure of any kind." Four Republican members of the panel also issued a statement saying the report "loses objectivity and perspective" in portraying the remarks of Sprinkel and Darby "as an effort to exert improper pressure." The statement was signed by Sens. Jake Garn, R-Utah; David Karnes, Kit Bond, and Phil Gramm, R-Texas. The Republicans also scoffed at the report's contention that Sprinkel attempted to influence the Federal Reserve through the press, saying his views were not supposed to be kept secret and noting the Banking Committee itself had called him as a witness in open hearings.

The report said Darby "wrote a letter to the governors of the Federal Reserve Board and to the Reserve Bank presidents on the Federal Open Market Committee just before the February meeting suggesting that money growth was too slow." The report said the remarks could be "ironically counterproductive" because they "could result in the Fed acting less vigorously than it otherwise would in WASHINGTON (AP) A Senate committee accused the Reagan administration Friday of placing excessive political pressure on the Federal Reserve Board to speed up the growth of the nation's supply of money. "Since the time of the stock market crash in October of 1987, the Federal Reserve has come under excessive political pressure from the administration," the Senate Banking Committee said in a report. Remarks by James Baker, former Treasury secretary, and Beryl Sprinkel, Council of Economic Advisers chairman, as well as a letter written by Michael Darby, assistant Treasury secretary, were cited as examples of political pressure. Following the October 1987 crash, the Federal Reserve's Open Markets Committee sent a large infusion of cash into the economy but then began tightening again, rekindling administration concerns. The report quoted Alan Greenspan, federal reserve chairman, as saying he was concerned about efforts to influence the Fed and that such moves might end up backfiring because "we will feel a necessity to do precisely the opposite." In Los Angeles, presidential spokesman Marlin Fitzwater rejected the re Crop futures market now hinges upon demand September corn finished the week at $2,7714 a bushel, off 21 percent from the July 5 high of "The break was almost as vicious as the rally," said Michael O'Malley, a trader with R.J.

O'Brien Associates, a Chicago-based commodity brokerage house specializing in retail accounts. With the corn harvest already begun in the South, corn and soybean traders are anticipating a seasonal dip in prices linked to the gathering of new supplies "harvest pressure," they call it. The phenomenon is expected despite estimates that corn and soybean production will decline 37 percent and 23 percent, respectively, from last year's levels. After the harvest, demand typically becomes the prime influence in the grain markets. The wheat market has been firming lately on expectations of increased foreign demand and some experts believe wheat futures prices are primed for a dramatic surge.

Wheat for September delivery in Chicago settled at $3.90 a bushel on Friday, 31 cents below the contract's lifetime high. Gordon D. Linn, president of Chicago-based Linnco Futures citing declining U.S. wheat stockpiles and reduced wheat produuion mis year in the United States, Canada and Argentina, predicted a 15 percent jump in wheat futures prices. four weeks ago," said Gerald Zusel, a vice president of Balfour Maclaine Corp.

and manager of the brokerage firm's activities on the grain floor. "The weather is certainly a lot less important now than it was then," agreed Victor Lespinasse, a trader with Dean Witter Reynolds Inc. "The focus is shifting more and more to demand." Zusel said Balfour's grain and soybean trading volume has fallen 20 percent to 30 percent since late June-early July, when prices peaked, then plunged following a weekend of unexpected rain. The change in the markets was readily apparent during a visit to the floor this past Thursday. The soybean futures pit, the eye of this summer's speculative storm, was jammed and boisterous at the opening and close but held fewer than 20 traders at mid-session.

Exchange statistics show the average daily trading volume in soybean futures during the first three weeks of August has fallen 36 percent since the same period in June while corn volume has dropped by 28 percent. Prices for near-month delivery of soybeans and corn the two major markets most affected by the drought have also fallen dramatically. September soybeans closed Friday at $8.31 a bushel, down 24 percent from the June 23 peak of ASSOCIATED PRESS At least one grain trader snoozed through the noon hour while most of his colleagues chatted along the sidelines in a scene that could hardly have been imagined just six weeks ago at the Chicago Board of Trade. The great drought rally of 1988 is history, just a big blip on a long chart. The small-time speculators whose money fueled the mid-summer run-up have gone home to count their winnings or nurse their lumps, and seasoned players in the crop futures markets are looking ahead to the next wave the harvest trough and the demand surge.

"The weather market ended three or sumer Product Safety Commission reports. STATEMETRO heads west The Procter Gamble continuing competition battle with Clorox is expanding its new Tide with Bleach into West Coast sales..