Better Watch Out

The President's budget assumes the economy will shake off its slump, but America's debt burden leaves it highly vulnerable to a recession

The life signs of the U.S. economy have been shaky for months, as if it had a mild case of the Shanghai flu. Inflation is drifting upward, while economic activity seems stuck in a quagmire of intense foreign competition and excessive debt. During the last quarter of 1989, the economy grew by only 0.5%, the slowest pace in three years. Warns Kazuaki Harada, chief economist of Japan's Sanwa Bank: "The real U.S. situation is worse than the growth-rate figures would indicate." Federal Reserve Board Chairman Alan Greenspan, whose finger is closest to the American economic pulse, thinks the current slump is...

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