Recovery threatened

By William Baugh William E. Baugh & Associates Neuport Beach, Ca.

IT IS QUITEIpossible

that the strong economic recovery of the country is over. This is not to say we are returning to the chaos of l98l1982 but that the word "recovery" has given way to "expansion," a much milder expression of growth.

The recovery which is now in completion of its first anniversary has been much stronger than many thought would occur. Whatever the cause of recovery (while all factions of economic thought take credit for it), there are indications that it could falter. Recovery was sustained the first half of the year by consumers mindful of interest rates, who were inspired to buy. Higher incomes did not fund these purchases, but savings did, so it may not last too long. Our savings rate is the lowest since the Korean war.

Spending has helped our industries and the production of durables has

Story at a Glance

Recovery gives way to slower expansion. . .lurther progress may lalter if business investment doesn't increase. the Fed will be left by the administration to cope alone with debt higher operatang costs.

risen sharply. Housing has also been strong. Lower interest rates beginning in 1982 and the spring of 1983 contributed greatly to a strong residential building market. Some momentum is being lost, however, as interest rates have edged up.

Our course of domestic recovery will continue into 1984 but by the middle of the year, the recovery could be waning unless business investment picks up. There are some who fear our anticipated budget

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