Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, December 26, 1994                   TAG: 9412270090
SECTION: EDITORIAL                    PAGE: A10   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

SALES AND SIGNS

Now Americans can start digging out of the debt accumulated to buy all the presents opened yesterday.

It was a very good sales season. The malls teemed. Americans spent some $50 billion on each other, a sign of consumer confidence and economic strength for now - but also a hefty addition to private debt. Collection agencies may be busy next year.

It seems a protracted period of credit-crunch has given way to a time of easy credit, even to loan-bidding wars. But these things go in cycles.

Lingering in Washington, ready to dispense middle-class tax breaks, Santa Claus may be busy before his next Christmas cycle returns. But a good point was made by Bob Denham, the head of Salomon Brothers Inc., the New York investment firm, and a member of the now-dismantled Bipartisan Commission on Entitlement and Tax Reform.

"The story at the moment is middle-class tax relief," Denham said. But he added that unless Congress starts moving toward reform of budget-busting entitlements - Social Security, Medicare, etc. - "the next story will be middle-class tax increases."

Meantime, the ever-sober Federal Reserve may hit the consumer economy with more pre-emptive strikes against price increases in consumer goods.

Raising interest rates will keep inflation at bay, but could complicate debtors' efforts to pay off their loans. It also would make interest on the national debt more expensive to carry, which could help push the federal deficit higher. Tax cuts wouldn't help in this regard, either. And the Fed in turn might be prompted to push interest rates higher still.

Tougher times may lie ahead.