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ECONOMIC RECOVERY INCHING ALONG, SAYS INVESTMENT CHIEF

 ECONOMIC RECOVERY INCHING ALONG, SAYS INVESTMENT CHIEF
 CHICAGO, Nov. 26 /PRNewswire/ -- Though economic discussions revolve around its slow start, the recovery has begun and should continue for quite some time, an investment management leader said today.
 "After three quarters of falling GNP, the economy posted a modest gain in the third quarter," said Robert D. Milne, president and chief executive of Duff & Phelps Investment Management Company (D&PIMC), in his firm's latest Investment Outlook report. "It is not unusual to see a recovery start out in a halting manner. I will take some time before the general public is convinced that the recovery is real."
 An essential requirement for a recovery is that consumers and businesses start borrowing again. However, potential borrowers are still concerned about their debt loads. Moreover, banks and savings and loans are absorbing writeoffs from problem loans made during the exuberant 1980s and are showing little interest in making loans to any but top tier credits.
 "The collapse of FSLIC and the imminent collapse of the FDIC does little to make regulators encourage a change in these credit attitudes," Milne explained.
 Milne does believe there is one force that is going to bring about a return to expansion in bank credit -- the Federal Reserve. Because of weak demand for loans, short term interest rates have declined drastically and the Fed continues to push for even lower rates. Investors and financial institutions will not be satisfied with the low rates on high quality short term issues. First they will move to longer maturities to obtain better yields -- and then to securities and loans to credit worthy borrowers that are not being turned down. Lower interest rates will encourage businesses to borrow funds for new projects that were unattractive at double digit interest rates. In short, the current move to lower interest rates will reverse this unusual aversion to borrowing and help the recovery to begin in earnest.
 -0- 11/26/91
 /CONTACT: Robert D. Milne or James O'Neill of Duff & Phelps Investment Management Company, 216-771-3450; or Richard R. Davis of Duff & Phelps, 312-368-5503/ CO: Duff & Phelps Investment Management Company ST: Illinois IN: FIN SU: ECO


TS -- NY045 -- 7275 11/26/91 12:10 EST
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Publication:PR Newswire
Date:Nov 26, 1991
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