The national economy continues to expand and set longevity records. Data concerning June to September performance suggest that the national economy grew at a modest 2.5 percent. Many analysts feel that this number is a bit misleading and overstates the situation due to a surge in automobile sales as consumers attempted to beat the 1990 price increases. Thus, the economy may be a bit weaker than the GNP numbers indicate.

     The stock market crash of October will probably have little or no effect on the national economy. The correlation between stock market turns and the direction of the economy has never been exact. This relationship is probably even more tenuous in today's world of sophisticated telecommunications and computer driven institutional trading. Thus, the great volatility in the market can be associated with factors other than those directly related to fundamental changes in the economy and corporate profitability.

     The tight monetary policy pursued by the Federal Reserve System over the past several years has cooled the economy sufficiently enough that inflation will continue to moderate. This may mean that the downward trend in interest rates will continue. Since June of this year rates have been trending lower.

     Further evidence to suggest that the national economy is cooling comes from employment data. Job creation has slowed dramatically in the service sector for example and in the important manufacturing sector declines and layoffs have been reported. As a corollary the unemployment rate for the United States rose during September giving another signal that the economy may be in a weaker position than previously thought. Thus there is a great deal of uncertainty surrounding the degree to which the economy is decelerating. One school of thought takes the position that the economy is entering a soft landing, another holds that the recession that has been coming for years is now about to arrive. Only time will decide this issue.