[PEN-L:11793] FED Seeks UPS Data

[Michael Eisenscher <meisenscher@xxxxxxxxxxx>]

Views Differ On Federal Reserve Request For
 UPS Information

 By JENNIFER FRON MAUER
 Dow Jones Newswires

 NEW YORK -- Economists are uncertain how to interpret the Federal
 Reserve System's request for information from United Parcel Service of
 America Inc. on the economic impact of the Teamsters strike.

 Some say the Fed may be gathering information for a possible intervention by
 the White House. Others suggested the agency is trying to gauge whether the
 strike has affected liquidity levels in the federal reserve system. Still
others say
 the inquiry is merely a routine part of any strike and thus means little.

 On Tuesday, the Fed asked UPS to provide information on the value of goods
 the company distributes to various sectors of the economy, such as
 manufacturing, retail and wholesale, and the value of diffent types of goods it
 distributes, such as industrial and commercial machinery and apparel.

 President Clinton has been reluctant to intervene in the now-12-day-old strike,
 despite repeated requests from UPS and other affected businesses. Under the
 Taft-Hartley Act, the President can get involved only if the strike
represents a
 threat to U.S. health and safety.

 So far, the strike hasn't created imbalances or risks that might draw him in,
 economists said. But, in time, it could.

 Economist Donald Ratajczak of Georgia State University in Atlanta said that
 any major impact won't be evident unless the strike lasts three months.

 Georgia State's Ratajczak said the strike is already having some impact. Truck
 rates have skyrocketed in the past two weeks, he said, and those costs could
 be passed on in the form of higher prices.

 If the strike were to last three months or more, such cost increases could add
 0.5% to prices, he said.

 Ratajczak predicted that, should the strike continue through next week,
 catalog companies that have been hit hard could start laying off workers.

 He estimated that if the strike lasts three months, the Gross Domestic Product
 could drop as much by as 0.5% to 0.75%.

 Still, economists agree it is difficult to know for sure how much the Teamsters
 strike could hurt the economy since there is no way to measure how much of
 UPS's normal business is being moved another way.

 Not even UPS seems to know. Almost daily during the strike the company
 has said it is moving 10% of the 12 million packages a day it normally
delivers.
 In its response letter to the Fed, however, UPS said it is now moving just
 500,000 packages a day.

 In the end, Dennis O'Toole, associate professor of economics at Virginia
 Commonwealth University in Richmond, said the strike might slow the
 economy just enough to ensure the Federal Reserve won't hike interest rates in
 the third quarter.