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LOW INFLATION AND INTEREST RATES, MODERATE GROWTH FUEL IMPROVED '93 OUTLOOK: CONTINENTAL BANK ECONOMIST

 CHICAGO, Nov. 25 ~PRNewswire~ -- The sluggish American economy is showing muted but definite signs of recovery, and a significant jump in Christmas sales coupled with productivity gains by U.S. businesses will continue a moderate economic recovery in 1993, predicts Continental Bank Chief Economist Richard S. Peterson in his annual forecast.
 "In 1993, the American consumer and U.S. business will reap the benefits of significant debt reduction, low interest rates and cautious buying behavior," reports Peterson. "And frankly, this will occur with or without stimulus from the Clinton Administration."
 Peterson's forecast calls for the 1993 rate of inflation to fall to 3 percent, from the more than 4 percent rate of recent years. "For consumers, this will keep interest rates at very low levels, any price increases minimal and homeownership costs at the lowest levels in two decades. Consumers will gradually identify more dollars for discretionary purchases," he said.
 STRONG CHRISTMAS SEASON FOR RETAILERS
 Having restructured their own debt through mortgage refinancing, reduced costly credit-card balances and put off purchases, consumers are expected to fuel a strong Christmas buying season, Peterson says, predicting an 8-9 percent increase in sales this year, compared with less than 2 percent last year. "There's a clear backlog of demand, aggressive price competition and a discernible degree of optimism accompanying a hoped-for change in Washington," Peterson notes.
 CLINTON WILL BENEFIT -- NO MATTER WHAT HE DOES
 The cautious approach of American businesses in the last two years, significant gains in worker productivity and the reduction of corporate debt will spur moderate but improved business growth next year, says the Continental economist, forecasting the Gross Domestic Product (GDP) to rise by slightly more than 3 percent in 1993, compared with a 2.4 percent increase this year.
 "Bill Clinton is lucky to have been elected at this point in the cycle," Peterson suggests. "No matter what he does in his first year in office, he stands to benefit from several years of cautious business management, a major restructuring of company debt and a paring of the costs of doing business. The most difficult period is now behind both business and the consumer."
 INTEREST RATES TO STAY LOW
 With inflation in check, Peterson expects no further reduction in interest rates by the Federal Reserve Board in the first six months of 1993. Mortgage rates won't change significantly next year, nor will rates for shorter-term business or consumer loans such as auto loans and home- equity lines of credit.
 The bank economist noted, however, there is increasing pressure on credit-card issuers to reduce rates charged to customers. "The continued low interest-rate environment and new providers of revolving credit will prompt more issuers to reduce rates charged," he said.
 -0- 11~25~92
 ~NOTES TO EDITOR: 1. Continental Bank N.A. focuses on meeting the capital and financial management needs of public and privately held businesses nationwide. The bank provides business financing, specialized financial and operating services and private banking services. Continental also engages in equity finance and investing, as both principal and arranger, and international trading, for customers and its own account.
 2. To be added to the mailing list for Peterson's bimonthly economic newsletter, Continental Comment, call Bill Murschel,...
 Mr. Peterson will be available for telephone or video interviews Wednesday, Nov. 25 and Friday, Nov. 27 in addition to next week. Call him directly at 312-828-7840.~
 ~CONTACT: William Murschel, 312-923-5130; or Jane Crowley Griffin 312-923-5122, both of Continental Bank~
 (CBK)


CO: Continental Bank ST: Illinois IN: FIN SU: ECO

LR -- NY020 -- 1480 11~25~92 11:21 EST
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Date:Nov 25, 1992
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