Tuesday, 1 February 2000
http://www.azstarnet.com/public/dnews/LF0225.html
WASHINGTON (AP) - Break out the champagne, cut the cake and strike up the band - it's time to celebrate the U.S. economy.
Today the current expansion that began in March 1991 becomes the longest in American history at 107 months, beating the old mark of 106 months set during the 1960s.
The eight years and 11 months since the last recession is quite
a feat considering the average expansion before 1982 did not last
long enough to see its third birthday, let alone its ninth.
``If you are not cheering for this accomplishment, then you have
awfully high standards,'' said David Wyss, chief economist at
Standard & Poor's DRI. ``This is an unprecedented economy.''
And it is not just length that makes the current period remarkable.
By almost any measure, these are good economic times. Unemployment
is at its lowest level in 30 years - 4.1 percent - consumer confidence
is at record highs and Wall Street has just wrapped up an unprecedented
five straight years of returns of 20 percent or more in the S&P500
stock list.
Long past the time that most expansions are showing their age,this
one seems to be getting stronger, with 1999 marking the third
straight year with growth at 4 percent or more.
Normally, economic growth at those levels, combined with a dwindling supply of workers, would translate into rapidly rising wages,leading to higher inflation. But not this time. Last year, the so-called core rate of inflation, which takes out volatile energy and food products, was up just 1.9 percent, the best performance in 34 years.
President Clinton takes every opportunity to cite the soundness of the Clinton-Gore deficit-reduction program as a key building block for the good economy, hoping voters will reward Democrats this fall.
Republicans are quick to note that the current recovery actually started nearly two years before Clinton took office, when Republican George Bush was president.
Bush's misfortune was that while the last recession only lasted eight months, from July 1990 until March 1991, the recovery in the early days was dubbed the ``jobless recovery'' because it was exceptionally sluggish, allowing Clinton to make the weak economy a key campaign issue in 1992.
Asked to apportion credit among government policy-makers for the good times, private economists generally give the lion's share of praise to Federal Reserve Chairman Alan Greenspan and his central bank colleagues.
Greenspan has already engineered one soft landing - raising interest rates seven times in 1994 and early 1995 to slow things down and keep inflation under control. And he is now attempting a second soft landing.
Since last June, the Fed has raised rates three times and it is expected to do so again during its meetings today and tomorrow.
``The economy is growing so fast that even the Federal Reserve
hasn't been able to slow it down, and that's why they will be
raising rates again,'' said Richard Yamarone of Argus Research
Corp.
Economists, in fact, are looking for as many as three more rate
increases before summer, bringing the total number of credit-tightening
moves to seven in one year.
The absence of inflation pressures so far has allowed the Fed to let unemployment fall far below the 6 percent level that economists used to believe signaled dangers of rising wage pressures.