The national economy reportedly grew at a brisk 3.8 percent rate during the last three months of 1992. This represents the seventh consecutive quarter of GDP expansion. The National Bureau of Economic Research, the agency which decides the official beginning and end of business cycle fluctuations, determined that the last recession ended in March 1991. Recently a panel of over forty business economists was polled with regard to the direction of the national economy in 1993. The consensus was that Gross Domestic Product would expand by 2.8 percent during the first half of 1993 and later accelerate to 3.2 percent during the last half of the year. The group forecasted an inflation rate of about 2.9 percent for the coming year. Further, these analysts see interest rates rising slowly over the course of the year, with Treasury bill rates reaching 3.78 percent and Treasury bonds 7.49 percent. 

     The Federal Reserve also holds a cautiously optimistic view of the economy in the year ahead. Federal Reserve officials expect the economy to improve everywhere except in California. However, they feel that the job market outlook is uncertain at best. Job growth, or the lack thereof, seems to be the distinguishing characteristic of the economy at this time. Many large and well known corporations have announced layoffs. General Motors, IBM, Boeing, and Sears are examples of this disturbing trend. Moreover, only 21 percent of the jobs lost during the official recession have been replaced during this expansion. Historically since World War II, an expansion of seven quarters could have already created twice as many jobs as were lost during the preceding recession. 

     The international economic situation is of some concern. Much of the world is mired in recession as of February 1993. This is important to the U.S. because much of our growth during the early 1990's has come from exporting. With our trading partners in recession the trade deficit widened to $7.6 billion in November and to $76 billion for the year. With one month of data yet to be collected, the trade deficit will surely pass the total for 1991. This will be the first time in five years that the trade gap has not narrowed. It is likely that the trade deficit will surpass $100 billion unless our trading partners pull out of their recessions. 

     Given that the U.S. economy is growing in terms of GDP, but seems to be having trouble generating job opportunities, it will be most interesting to see the economic plan President Clinton presents to Congress. Possibilities may include a quick‑fix investment package, longer term public investment programs in education and public infrastructure, investment tax credits, and/or a cut in the capital gains tax, and worker training programs, etc. Some form of a tax increase is also likely as part of a package to address the budget deficit. Regardless of the type of action President Clinton takes, it is likely to be very modest in terms of the dollar amount. Simply stated, the budget deficit and the potential reaction of the world's financial markets to a dramatic increase in the deficit will surely limit the changes the new president can propose.