Word: slowdowns
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Economists have been hoping that a modest slowdown would help ease another thorny problem, the U.S. trade deficit, by suppressing the American appetite for imported goods. So far, that has not happened. The Government announced last week that the trade deficit swelled to $10.2 billion in May, up from $8.3 billion in April. Especially troubling was a 4.3% rise in imports, to a record $40.7 billion, which suggested that foreign brand names remain a powerful enticement for U.S. shoppers...
Some economists believe the slack period will be short-lived and will be followed by renewed growth, a scenario that has them searching for metaphors. David Hale, chief economist of Chicago's Kemper Financial Services, characterizes the slowdown as an "output pause." Geoffrey Moore, an economics professor at Columbia University, talks of a "stutter step." Economist Lyle Gramley, a former Fed governor, says that by late 1990 the slowdown may be followed by a period of "economic refreshment...
While soft-landing scenarios provide reassuring reading, some economists think such forecasts belong on the fiction shelf. If U.S. economic history is any guide, a soft landing is a long shot. That kind of gentle slowdown occurred only once before, in 1967, when the military buildup during the Viet Nam War fueled a demand for capital goods...
...stifling inflation without making the kind of sudden moves that could trigger a recession. The U.S. may be in for only a brief and relatively innocuous reversal like the one in 1961 rather than the painful contraction of 1981-82, when the unemployment rate averaged 8.7%. The current slowdown "is not a good thing, but it's the cost of a good thing," says economist George Stigler, a Nobel laureate and professor at the University of Chicago. Americans can only hope that if they pay now, they can fly again later...
...Chairman Alan Greenspan acknowledges the threat of a recession and Detroit faces slumping car sales, economists debate how painful the slowdown may become...