cited are the growth rate of gross national product, the unemployment rate and the rate of inflation ( for which there exist several different measures ). all of these statistics have been coming up roses for some time – simultaneously. the gdp ( in real terms, after inflation ) has been growing continuously for eight years and this long expansion, instead of petering out, has accelerated in the last couple of years. real gdp grew about 4. 5 percent in the first quarter of this year and has grown about 4 percent a year for the last two years, despite the negative impact of the world financial crisis that began in asia in early 1997. millions of new jobs have been created in the last few years ; and unemployment, now at 4. 3 percent, has been at or below 5 percent for over two years. not long ago, most economists thought growth this rapid and unemployment this low would inevitably produce inflation. however, inflation has remained remarkably subdued, and, indeed has continued to decline over the last several years. all of this means rising standards of living and greater economic security for most americans. moreover, the strength of the economy has been spread broadly across all regions of the country. a few areas with deep - seated economic problems, such as northern minnesota, still lag, and parts of agriculture are suffering severely from the downward pressure of weak world demand on commodity prices, but growth in other sectors has taken up much of the slack. low inflation has reduced expectations of inflation, lowered long - term interest rates, encouraged investment and housing and made planning ahead easier for everyone. moreover, in the last couple of years, one of the discouraging aspects of this long expansion finally seems to be reversing. through 1996, the benefits of rising prosperity were flowing to those with skill and education, people already doing relatively well. those at the low end of the skill and income ladder were falling further behind. recently, however, very tight labor markets have meant that even unskilled and less educated workers have enjoyed higher real earnings, poverty rates have begun to decline, and even the bottom 20 percent of households have had a significant increase in their standard of living for a change. the high performance of the economy does not just mean more material possessions for most people, although it certainly does mean that. it also means more enjoyment of and support for the creative side of life – art, music, theatre, dance – and more public resources for improving streets, parks and schools, cleaning up pollution and preserving natural beauty

the same time, the u. s. dollar has been strong, especially in relation to currencies of emerging market countries. in part, the strength of the dollar reflects the fact that our economy has been performing so well and has offered international investors profitable opportunities along with a safe haven from political and financial turmoil. the strong dollar has made imports cheap and has helped keep inflation low - to the benefit of u. s. consumers and the distress of some u. s. producers. we can ’ t count on low world commodity prices or a strong dollar continuing far into the future, and both have their downsides for us and for others. some features of the global economy, however, seem likely to endure. the events of the last two years come on top of a huge expansion of global trade, competition and productive capacity – all of which have given american businesses less control over prices in the face of rising costs and benefited american consumers through low prices. moreover, although we often think of “ global competition ” as being associated with internationally traded goods, many of the same forces that have made the global marketplace increasingly competitive – especially faster, cheaper transportation and the revolutionary changes in communications and information management – also operate to make domestic markets broader and more competitive. as buying, selling, and comparing prices at a distance has become easier, producers of all kinds of goods and services have found themselves in a more competitive environment with less independent pricing power than they used to have. the increasing competitiveness of the u. s. economy – and that of the rest of the world – seems likely to continue to reduce inflationary tendencies in the future. further deregulation would foster this competitiveness, as would further lowering of trade barriers. conversely, reregulation or a relapse into protectionism would tend to negate the procompetitive and antiinflationary trend. fierce national and international competition has its cost in uncertainty, disruption of lives and settled patterns. it demands flexibility and adaptability of businesses, workers and communities. it requires a willingness of workers to learn new skills, to take chances, to move to new jobs and new places. it requires nimbleness, flexibility and risk taking on the part of business. it requires communities to be adaptable, to make efforts ( not all of which will be successful ) to diversify their economic bases and to attract new jobs and residents when existing ones move on. it requires government to be imaginative and creative ( words we don ’ t