Word: hellers
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...more sanguine about the future course of interest rates than either the pessimists or Regan. They generally see the prime rate peaking at about 20%, perhaps a little higher, but then falling back to 15% or so by autumn. Other short-term rates will probably do the same. Walter Heller, President Kennedy's chief economic adviser, expects that an economic slowdown in the next month or two will pull down the cost of borrowing money. John E. Barnds, vice president, business and banking analysis at the National Bank of Detroit, feels the "general trend of short-term rates...
Many economists had expected oil prices to jump even more after decontrol. Price increases, though, were held back a little by the high oil stocks around the world. Walter Heller, former economic adviser to President Kennedy, also pointed out that lower than expected increases in housing and food prices had acted as a brake on inflation, and he foresees less steeply rising prices for a few months...
...Walter Heller, a member of TIME'S Board of Economists, points out that, quite apart from its effects on inflation, a swelling deficit operates directly to reduce savings in the economy. The Government must borrow to cover the deficit, thus decreasing savings, and in a briskly expanding economy this would reduce the money available for private investment. ''The quickest and surest way to increase savings is to reduce the deficit or run a budget surplus," says Heller. But he fears that the Reagan program will do the exact opposite, at least in the short...
...Democrat Heller cautioned, however, that Volcker is not likely to repeat his move of last spring and begin excessively increasing the money supply a second time if the economy starts to falter. Said Heller: "Volcker has had a burning experience, and he is now being driven almost by a sense of inner guilt. He eased up too much too soon, and he knows it. Now Volcker may be overcompensating...
...cuts now might encourage everyone to start asking for more in expectation of still higher inflation. Said Economist Eckstein: "The scientific evidence suggests that the only thing that improves inflation expectations is actual experience, and the experience in 1981 is just not going to be all that marvelous." Added Heller: "I hope and pray that President-elect Reagan can lower inflationary expectations, but the prospects do not look very good. The fact is that tax cuts go against the public's conception of an anti-inflation strategy...