Atlanta Fed President Expects Continued but More Moderate Growth in 1998

EMBARGOED UNTIL 1 P.M. Jan. 5, 1998

ATLANTA - The U.S. economy for 1998 will feature continued growth, although at a slower pace than in 1997, said Jack Guynn, president and chief executive officer of the Federal Reserve Bank of Atlanta.

Guynn, speaking before the Atlanta Rotary Club today, said that the national economy as measured by gross domestic product should grow around 2-1/2 percent on an average annual basis in 1998, a more moderate rate than the 3.8 percent performance of 1997. He said that inflation as measured by the consumer price index should remain near 2-1/2 percent and that the unemployment rate should average approximately 4-1/2 percent this year. He also said that business investment as well as consumer spending should remain healthy in 1998.

In examining other economic factors, Guynn said that the U.S. trade deficit should widen in 1998, partly as a result of the Asian economic crisis. More generally, he attributed the Asian crisis to government industrial policy, including government-directed investment and currency manipulation. Guynn said, however, he is not concerned about the United States catching the "Asian flu."

"The real issue for 1998 could be the internal threat to our post-war economic leadership," Guynn said. "The widening trade gap won't affect GDP significantly, but its effects will be more acute for particular industries and regions. I am concerned that these voices of discontent and the voices that shouted down Fast Track will become a protectionist chorus."

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