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To: T L Comiskey who wrote (89344)	1/15/1999 12:07:00 PM
From: Mohan Marette	Respond to of 176387

Break out the champagne. Tim: Oh yeah,the sky is falling run for cover,yes right now and don't forget the shot gun and the canned goods.<g> =================================== U.S. economy shows unusual strength in 1998 Unfolding Brazilian economic crisis is one of the risks to U.S. well-being for 1999 By Martha M. Hamilton The Washington Post Published: Jan. 15, 1999 WASHINGTON -- Want to get an early start on the millennium celebration? Break out the champagne for the U.S. economy, which last year displayed an almost unprecedented combination of strengths -- including low inflation, low unemployment and strong retail sales. The Labor Department reported Thursday that consumer prices rose by a scant 1.6 percent in 1998, even lower than the 1.7 percent rate of the year before. It was the first time in more than 30 years that the economy has had two years back to back of such low inflation. Cheap energy prices and falling prices for computers helped keep inflation low; the only major price rise was for cigarettes. "It is really a remarkable period that we are in right now," said Bill Cheney, chief economist for John Hancock Mutual Life Insurance Co. in Boston. "This may be completely unprecedented," said Cheney, who noted that the only exception to the good signals from the economy is the burgeoning trade deficit. In detailing the inflation picture, the Labor Department said energy prices fell 8.8 percent, the biggest drop in 12 years. That included a 15.4 percent drop for gasoline. Food prices rose 2.3 percent. But there was a record 31.8 percent price increase for tobacco, reflecting tobacco companies' drive to recoup the multibillion-dollar cost of state liability settlements. In other problem areas, prescription drug and education costs both jumped nearly 5 percent. But Asian competition helped hold prices flat for new cars, pushed down clothing costs 0.7 percent and computer prices 36 percent. In addition to consumer prices, the Commerce Department reported that retail sales in December were up 0.9 percent from the same month a year before, to a seasonally adjusted $231.4 billion. The nation rang up $2.7 trillion in retail sales for all of 1998, an increase of 5.1 percent from 1997. Sales of automobiles and housing materials were major contributors to the increase. The last time the economy displayed anything close to this combination of favorable indicators appears to have been in the mid-1950s, according to Patrick C. Jackman, an economist at the Bureau of Labor Statistics. Jackman said the U.S. economy had also enjoyed strong growth in 1955, when the unemployment rate was 4.4 percent -- nearly the same as now -- and the inflation rate was only 0.4 percent. But the strong growth then resulted from coming out of a recession, he said. "We see a pretty decent economy going forward, but there certainly are risks out there," said Cynthia Latta, principal U.S. economist with the Standard & Poor's forecasting firm of DRI. "One of the risks is the already unfolding crisis in Brazil. We don't really know what impact that's going to have on consumers. If the stock market really falters, we could see consumers starting to pull in their horns a little bit." Right now, she said, consumers feel justified in spending because increases in the stock market have increased the size of their savings -- for the time being. Thursday the Dow Jones industrial average fell 228.63 points to 9,120.93 because of concerns about the economic crisis in Brazil and continuing worries about the earnings of U.S. corporations.