Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 19, 1993 TAG: 9302190149
SECTION: BUSINESS PAGE: A5 EDITION: METRO
SOURCE: GEORGE KEGLEY STAFF WRITER
DATELINE: LENGTH: Medium
CRESTAR'S SENIOR ECONOMIST:
President Clinton must assure the American people that revenues from higher taxes will be applied to the deficit, a Virginia bank economist said Thursday.If average Americans have to pay higher taxes on gas, oil or income, they would like to have this assurance and they didn't get it in the president's speech Wednesday night, said Alan Gayle, senior economist with Crestar Bank in Richmond. Gayle spoke at the kickoff of the Roanoke Valley savings bond campaign.
It is not clear that new money will be used to cut the deficit, he said, and the financial markets have not improved substantially because they have doubts. If the markets believed the deficit would be reduced, long-term interest rates would fall, Gayle said.
Clinton's "delivery and his vision are good," he said, but if the economy is as weak as the president says, the public needs to be convinced that Congress is "on the up and up" in cutting the deficit.
The historic pattern of the deficit reduction process is that "a lot of promises are made and broken" by both political parties, he said.
When Gayle asked his audience of about 40 representatives of Roanoke-area businesses and institutions if they had heard Clinton's economy speech, every hand went up. But when he asked how many liked the economic package, no hands were raised.
From his research, Gayle said, the recession is over and business is expanding, "producing more goods and services than ever with fewer people . . . . The economy is alive and well."
But he admitted that all is not good. Recovery of jobs is "modest" by historical comparison with other recessions. Pressures on manufacturing suggest that more jobs should be added, he said.
Gayle reported other good economic news:
Christmas spending was very healthy last year.
Existing-home sales have taken off sharply, bringing money into the real estate market.
Factory orders are at a nine-year high and manufacturers are starting to have problems with their vendors.
The average factory work week is at its highest level in 25 years.
Inflation is at 2.9 percent, "as low as it has been in 25 years."
Gayle predicted overall growth of 3 percent for 1993, slightly ahead of last year, with "a gentle, modest upward pressure on interest rates."
The 7.66 percent average rate for savings bonds in the past decade is much better than the rate for certificates of deposit, said James Arend, new savings bond campaign chairman for the Roanoke area and senior vice president of Atlantic Mutual Cos.
Larry Harding, regional savings bond manager, said bond sales in Roanoke Valley and Botetourt County in 1992 amounted to $18.2 million, almost double the level of previous years.