Word: growth
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Dates: during 1980-1989
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...cheaper dollar makes U.S. products less expensive to foreigners and thus eventually boosts demand for American exports. Conversely, a weak dollar makes foreign goods more costly in the U.S. and dampens Americans' enthusiasm for imports. That, in fact, is what has happened: this year exports have increased, and the growth of imports has slowed sharply. The problem is that with the dollar continuing to drop precipitously, the cost of the imports is going up much faster than their volume, and the trade deficit is going through the roof...
...Claremont Economics Institute in California, "then I think that's a danger. The Fed will have to print substantial money next year to keep the economy out of a recession." But in an election year, when the Administration would plainly prefer a loose monetary policy to pump up economic growth, Greenspan could be accused of playing politics at the expense of prudence. Declares Kellner of Manufacturers Hanover: "The financial markets won't let Greenspan grease the skids for the politicians in 1988. Only if a recession began might the Fed be able to do something. But then that would...
Howard Wachtel, professor of economics at American University, is worried that if the trade deficit does not show some signs of improvement soon, the dollar might tumble further. That could force the Federal Reserve to raise interest rates to stabilize the U.S. currency, whatever the toll on economic growth. Admits a top Administration official: "There has never been a trade deficit of this magnitude that has not been corrected by a recession...
Many of the economists are optimistic, however, that the trade gap can be substantially reduced without an economic downturn. They expect increased growth abroad to boost demand for U.S. exports. One especially encouraging sign: Japan's economy grew at an annual rate of 8.4% in the quarter ending in September, thanks in part to a $38 billion government program to stimulate the economy that passed the parliament last spring. Roger Brinner, chief economist of the forecasting firm Data Resources, predicts that even West Germany will spur its economy and increase imports from the U.S. Says he: "The stimulus in Europe...
Forecasters agree that U.S. exports will be the main engine for whatever growth is achieved in 1988. "The export industries appear to be out of the woods," says Thomas Swanstrom, chief economist for Sears. David Hale, the chief economist for Kemper Financial Services in Chicago, predicts that exports of manufactured goods could jump 15% to 20% next year, at the expense of America's trading partners. "We are going to increase our market share," he says, "largely by cannibalizing the foreigners...