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RATAJCZAK ISSUES QUARTERLY ECONOMIC FORECAST

 RATAJCZAK ISSUES QUARTERLY ECONOMIC FORECAST
 ATLANTA, Aug. 20 /PRNewswire/ -- The following quarterly economic


forecast, written by Donald Ratajczak, director, Economic Forecasting Center, College of Business Administration, Georgia State University, was issued today:
 Economic activity in the United States will exceed the pre-recession levels of the second quarter of 1990 during the summer of 1992, according to the latest forecast presented by the Economic Forecasting Center of Georgia State University.
 This means that any new dip in economic activity will be called a new recession. (GSU estimates suggest that the recession, which started July 1990, probably ended in March or April of 1991.)
 Although the recession is over, no meaningful recovery has occurred. The sluggish 1.4 percent growth in Gross Domestic Product (GDP) during the second quarter of 1992 should be followed by only a 1.8 percent gain in the third quarter before growth in excess of 3 percent finally arrives in the fall. Historically, incumbent presidents have been unable to win re-election if economic growth in the two quarters prior to the election average less than 3 percent. As a result, the forecast assumes Governor Clinton-type of economic programs will occur during the next two years.
 Economic growth will improve in 1993 as GDP is expected to grow by 2.9 percent. Modest growth also is projected early in 1994. Inflation should remain tame. The consumer price index should increase only 3 percent this year and 3.3 percent in 1993. Interest rates are expected to fall slightly further during the fall of 1992 before gradually drifting upward in 1993. The prime rate is projected to reach only 6.5 percent in the fourth quarter of 1993 before drifting further upward in 1994. Unemployment will remain uncomfortably high, averaging 7.5 percent this year and more than 7 percent in 1993.
 The outlook for the Georgia economy generally mirrors national conditions. However, the leading indicators have improved sharply in the latest quarter. Therefore, economic expansion seems assured, even if the rate of gain remains sluggish.
 After losing 48,600 jobs in 1991, Georgia should regain only 10,300 jobs in 1992. Another 38,100 jobs are expected to be added in 1993. Gains in manufacturing provide some support of job growth. However, the retail employment correction appears to be completed and the service economy is beginning to stir after losing jobs in 1991. Military cutbacks, slow growth in airline services, and bank consolidations will prevent any rapid recovery in Georgia, however.
 After four years of less income growth than in the state, Atlanta again is regaining its premier position in the state's economy. Our seasonally adjusted data indicate that employment grew nearly 10,000 during the first quarter of 1992, and that another 4,000 jobs were added during the spring. Modest job gains should continue during the year. Therefore, employment gains should exceed 1991 levels by 10,700 in 1992, according to the forecast, while an additional 24,800 new jobs are projected for 1993.
 Construction remains soft. Also, trade employment has not yet improved, despite sharply improving sales tax collections. However, the service economy is expanding rapidly, machinery manufacturing is growing rapidly, and the financial sector is being bolstered by strong gains in real estate employment. Stronger employment gains than currently projected are possible if the retail trade sector begins to recover this fall.
 While the national and Georgia economies remain sluggish, though growing, the Atlanta economy appears to be experiencing the beginning blooms of a solid recovery that will return it to the primary source of economic growth in Georgia, according to the latest forecast from the Economic Forecasting Center.
 -0- 8/20/92
 /CONTACT: GSU Economic Forecasting Center, 404-651-3282, or GSU Public Affairs, College of Business Administration, 404-651-2605/ CO: Georgia State University Economic Forecasting Center ST: Georgia IN: SU: ECO


BR-BN -- AT008 -- 1717 08/20/92 12:38 EDT
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Date:Aug 20, 1992
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