KENTUCKY REPORT

I the economv rose in Februarv which suggests that a rapid growth may c-ontinue for several months. New home sales

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surged 7.790 from January to an adjusted annual rate of 721,000 units. This index provides only a rough guide to future economic growth, but combined with other government statistics it seems to point to a continued growth.

As one Washington economist said "I think it is a boom-like economy; there is no significant decline for economic grofih on the horizon."

Adding to this strong economic growth last month, Commerce announced that sales of new single-family houses rose to a seasonally adjusted annual rate of 721,000 from January's revised 669,000 unit pace. Most of those connected with housing say that the domestic economy continues to be driven by a strong demand in all consumer sectors, rising investment spending, and inventory building. As a result of these figures many economists are increasing their predictions for growth.

However, I still think that such a rosy outlook could be upset by sharply higher interest rates which would put a crimp in investment plans and damage interest sensitive industries like automobiles and housing. Many believe that the Fed, in trying to head off inflation, may be tightening its grlp on credit which would continue to push interest rates higher.