Word: tradings
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Dates: during 1980-1989
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Only if the dollar's descent slows down will the U.S. at last enjoy an improvement in the trade deficit. Most of the economists surveyed said the dollar would indeed become more stable. Their median forecast has the dollar drifting down only 2.3% next year against the yen and 1.8% against the mark. At the same time, they predicted, the trade deficit will fall nearly 15%, from a record $175 billion this year to about $150 billion...
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...
...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...
...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...