The Long Haul: the U.S. Economy

If the recession is over, why does the pain linger? Because this is no normal recovery. Business is barely moving. And consumers have dug in their heels. But there's good news: if the U.S. gets to work

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The crowning touch to America's economic woes is the end of the cold war, a wondrous development for the country's future but a bombshell in the short run. "This economy has been on a wartime footing for all of our lives, and that's big stuff," says economist Sinai. "Instead of 3.3%-a-year rises in defense spending in real terms, we're going down in defense 5% a year." Besides letting huge clouds of steam out of the overall economy, the military build-down will take a huge personal toll on displaced workers. Says labor expert Lacey: "The people who are being jettisoned by the U.S. defense industry form a particularly tragic group in the U.S. work force right now. Some are high-wage production workers, roughly analogous to ex-autoworkers. As a result, the odds of their finding commensurate re-employment approach zero."

That the American economy can withstand all this and not collapse is a testament to its resilience. Many economists are beginning to think the most valuable resource America can have in the first half of the decade is the willingness to tough it out. "We just need more patience," says Texas A&M economist Jared Hazleton. "The economy is on a course to recovery, and part of that is very slow growth. People forget that we've made dramatic strides in the past few years in reducing debt and restructuring. We're much more efficient today in manufacturing and services. If we can keep inflation and interest rates down and keep moving forward, we're looking at a reasonable recovery in 1993-94."

But the prospects for a rise in consumer confidence are linked directly to the rate at which the economy can manufacture jobs at decent wages. Those will be hard to come by in the coming years, which will be spent curing these large and unwelcome burdens America is suddenly forced to bear. Slow growth is the curse of the 1990s. But if it is managed correctly, there is no reason to believe American prospects in the long run are dim. They are not. What is required is a collective political will that has been conspicuously absent from the American economic landscape for too long.

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