THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Wednesday, February 19, 1997 TAG: 9702190374
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: 54 lines
The combination of low unemployment and subdued inflation that helped President Clinton's re-election bid last November will continue through 1997, a bank economist told a gathering of corporate and municipal treasurers Tuesday.
With inflation at 3 percent and the jobless rate at 5 percent, Americans are increasingly confident about their economic prospects, said David Orr, an economist with Charlotte-based First Union Corp.
The outlook for Hampton Roads also looks promising. Two local economists told about 30 members of the Hampton Roads Treasury Management Association that they expect business activity in the region to pick up during 1997.
The high level of public satisfaction with the economy contrasts sharply with conditions in 1980, when the combination of jobless and inflation rates surpassed 20 percent. This ``misery index'' made it easy for Republican candidate Ronald Reagan to beat then-President Jimmy Carter in the 1980 presidential contest, Orr said.
``I don't think Ronald Reagan could have beaten Bill Clinton'' in the 1996 election, he said.
The nation's low inflation rate is due partly to the enormous investments that retailers, manufacturers and other companies have made in advanced computer technology.
``These tools are allowing companies to do more things cheaper,'' said Orr. ``Technology really is transforming everything.
Consumer prices also have been restrained by the rising value of the dollar against other major currencies. A stronger dollar reduces the cost of imported products and makes it more difficult for U.S. automakers and other manufacturers to raise their prices.
The dollar could continue to strengthen this year, and the country's economic policymakers probably won't intervene to halt it, Orr said.
The rising value of the dollar already has become a sore point for some U.S. exporters.
Mohammed Najand, an Old Dominion University economist, told the meeting of treasurers that the dollar's strength could dampen exports from Hampton Roads docks this year.
Still, the region's economy will generate additional jobs and higher retail sales, Najand said. ``There will be modest growth in 1997 because inflation is pretty much in control,'' the ODU economist said.
John W. Whaley, director of economic services at the Hampton Roads Planning District Commission, said local business activity will accelerate as the region reduces its dependence on defense activity and attracts expansion-minded companies from elsewhere in the country.
The region's economy, he said, was hurt last year by cutbacks in manufacturing jobs and well-paid federal jobs. These and other job losses prompted 10,000 more people to move out of Hampton Roads during 1996 than moved in.
KEYWORDS: HAMPTON ROADS ECONOMY