Word: budgeted
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Dates: during 1980-1989
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Another threat is a shortage of labor, which could push wages higher. In October the unemployment rate fell to 5.9%, the lowest level this decade. Notes Kathryn Eickhoff, former staff economist of the Office of Management and Budget and now a private consultant: "We are approaching a full-employment economy for both labor and capacity in industry. This is the type of combination that usually leads to price increases...
...essential steps toward keeping inflation in check -- and correcting the trade imbalance -- is a substantial reduction in the federal budget deficit. Years of excessive Government spending have put upward pressure on prices and helped overstimulate demand for imports. Many of the economists in the survey saw the recent budget compromise fashioned by Congress and the White House, which is intended to trim $30 billion from the deficit next year, as woefully inadequate. "The 1987 budget had a lot of phony stuff in it that will come back to haunt us in 1988," warns Jerry Jordan, chief economist at First Interstate...
Most of the forecasters predicted that the budget gap will grow from $148 billion in fiscal 1987 to somewhere between $160 billion and $175 billion next year. With an election year coming up, the chances for major spending cuts or tax increases are slim. Says Swiss Economist Christoph Koellreuter, who heads the Forecasting Institute at the University of Basel: "For political reasons, the U.S. is unlikely to do what it should...
Delay, though, could be costly. Warns Nakagama: "You might have another stock-market crash next spring if the Government doesn't do enough on the budget side. After all, if you are running at full employment, then what the hell are you doing with a $150 billion deficit...
...difficulty in cutting the budget shows that it will not be easy -- or painless -- for the U.S. to resolve its economic problems. Even if the country avoids a recession in the near future, it faces a long period of slower than normal growth, which will be necessary to bring down the trade deficit. The decline in the dollar will help, but only by curbing the rise in the U.S. standard of living. If Americans cannot lower their expectations now, they face faster inflation and a truly nasty recession somewhere down the road...