In this presidential election year of 1996, it is more than a little dangerous to make predictions concerning the future of macroeconomic growth in the United States. In addition to the (by-now-standard) "gridlock" between President and Congress concerning fiscal policy, there has been a record-length standoff between those same two branches of the federal government concerning the federal budget. The failure for so long to reach compromise represents either: (a) lack of political will/ability to find common ground, or (b) the inability of either branch to propose a coherent and workable macroeconomic blueprint for the future of the United States. The indicator numbers these days are encouraging: winter growth rates in new housing starts, reductions in unemployment. However, the reactions to this good news from "the market" (which, generally speaking, still means the New York Stock Exchange) have been confusing. Throughout March, stock market prices took dive after dive in the wake of what should theoretically have been positive economic indicators. Then, just as the analysts geared up to proclaim that "the bull" was being chased out by "the bear", the market was "revived" by new influxes of capital investment. At the Federal Reserve Bank, where monetary policy is fairly independent of direct political pressure, analysis of the current situation has been no less confounded. To this writer's mind, the very tight rein on interest rates that the chairman of the Federal Reserve has been maintaining - up a little, down a little - does not so much represent firm control as it does indecision. As stated at the beginning of this discussion, in a presidential election year it is dangerous to make long-term predictions concerning the macroeconomic growth of the United States.
That disclaimer uttered twice, it is believed by this writer that, in fact, the Gross National Product (GNP) of the United States will continue to grow at a ...