The outlook for the United States for the rest of 1990 suggests a continuation of the so‑called "soft landing." Depending upon the forecast employed, real growth in the U.S. economy should be in the 1.5 ‑ 2.5 percent range. This slackening in aggregate demand is forecasted to come from: a weakness in consumer spending due to mild job growth; slight to modest growth in business investment after several years of substantial investment in the nation's capital stock; a slowing in the rate of increase in government expenditures resulting from difficulties in raising additional revenues for new and existing programs; and lackluster export growth due to a general sluggishness in the global economy and appreciation of the dollar in foreign currency markets.

     Although real growth in goods and services for the United States economy will be difficult to come by in the quarters ahead, inflation will persist. The approximately 8 percent inflation rate for the first three months of the year should abate somewhat over the months ahead. The primary forces behind this temporary sharp surge in prices were weather related. Specifically, frost damage to produce and a strong demand for heating oil and gas helped push up the price level. However, even as the impact of these individual events diminishes over the course of time, the inflation rate should still average out at a significant 4.5 percent to 5.0 percent.
 

     With inertial inflation being so stubborn, it is increasingly unlikely that the Federal Reserve System will intervene to stimulate the economy with a major loosening of the money supply. To do so would surely aggravate the inflation situation. If the Federal Reserve does continue its present policy of easing up on money supply growth, it will do so in a guarded manner and will exercise much restraint in the process.