The pronouncement comes in the Forecast s June quarterly report, authored by co-director Professor Larry J. Kimbell and director of econometric forecasting, Dr. Rajeev Dhawan. That s the good news. On the downside, the specter of inflation looms over the national economy and the Federal Reserve Bank, and Alan Greenspan must raise interest rates to avoid an inflationary situation that could damage the expansion.
Inflation feeds on itself via peoples' expectations.
Internationally, crude oil prices are rising, Asian economies are starting to recover, and the chance of a recession in the Euro Zone has faded. These latter figures represent a slight increase from the March forecast. In California , the Anderson Forecast believes that the state s economy is being fueled, in part, by new wealth being created in the state by the bull market in stocks. Acknowledging that hard data on financial wealth is sketchy, even at the national level, Lieser uses conservative estimates of available figures to argue that new wealth has been a significant contributor to California's recent exceptional growth. In view of the expectation for higher interest rates and weaker profits through 2000, this source of growth is likely to be more limited, and the boom will give way to more sustainable growth.