Four years of economic expansion is
a long time, and we
think this economy has
just about one more year to go.
Translation the rest of nineteen eighty
five and the first eight or nine months
of nineteen eighty six look pretty good.
But then second part of our forecast
is the nineteen eighty six will be a good
year.
But at the end of the year,
just about a year from now, we think
there will be a recession.
We look for two down quarters then and
that's the official definition of a
recession.
Why a recession even though it won't last
long or be very severe?
Two main reasons. According to these
forecasters, the money supply, it's
been growing much more than expected,
more money in circulation.
And the Fed may have to rein that in a
bit. Second, and easier to understand
consumer spending.
It represents two thirds of our economy.
And simply put, it's run out of steam.
Consumers will continue to spend through
the next year, but consumer debt is at
an all time high and the savings rate
an all time low.
The well may be dry for a while.
This recovery is only by
historical standards.
We've had three years of
expansion and that's already
now beyond the average of
the law of averages by itself
doesn't produce a recession,
but it does, I think, highlight
the fact that we're
in a period of vulnerability in
eighty six.
What about the Metroplex?
While it too will feel the coming ups and
downs when we're up rather
than almost anywhere, but I
think the Dallas Fort Worth economy is
going to be one of the better local
economies in the nation next year.
I think our industry mix is such that
we're going to continue to see make gains
economically next year.
And there's nothing in the wings to
suggest that the
weaknesses that many people point to
will lead to a serious deterioration
in economic activity.
But remember, we, too, will feel the
changes, including a rise and then
a fall in interest rates as the recession
approaches, helping and then getting
such interest rate sensitive things as
housing and auto sales.