University Daily Kansan / Wednesday, January 31, 1990
11
Bush's Budget
Inflation too high, Fed says
The Associated Press
WASHINGTON — Federal Reserve Board Chairman Alan Greenspan said yesterday that the nation probably would avoid a recession this year but cautioned, "I wouldn't want to bet the ranch" on it.
At the same time, he told the congressional Joint Economic Committee that the inflation rate of about 4.7% was while stable, was unacceptably high.
His seemingly mild comments rocked financial markets, with traders interpreting them as a sign that the central bank will not lower intermediation soon. In the hours after his testimony, stock and bond prices fell sharply.
"What he's really saying is . . . if you want to get inflation down, it may be you have to live with crummy economic growth, not for a few quarters, but for a few years," said Bruce Steinberg of Merrill Lynch.
That's bad news for President Bush, who is counting on relatively
In an apparent signal of a policy shift, Greenspan said "4.5 percent (inflation) is unacceptable ... because it is very difficult in that type of environment to prevent it from accelerating.
"inflation at this stage represents the greatest threat of recession that we have because it will bring with it the loss of imbalances which hold in back."
strong growth and lower interest rates to help trim the federal budget deficit. Earlier this month, in a speech to homebuilders in Atlanta, Bush pressed the Fed to lower interest rates.
The risk of a recession has subsided somewhat since last spring, when the Fed began to ease credit, even though the economy, as measured by the gross national product, grew only 0.5 percent in the last three months of 1989, the slowest pace in three years, he said.
A new statistical analysis of the Commerce Department's Index of Leading Indicators suggests that the
probability of a recession developing in the next six months has declined from almost 30 percent last spring to about 20 percent, Greenspan said.
No indication on whether the economy has avoided a recession will be visible until well into spring, he said.
Despite the caveats, analysts said Greenspan was clearly more optimistic about growth than he was last July.
He cautioned that some unseen economic shock, on top of weakness in housing and manufacturing might lead to a widespread downturn in activity.
"There was a greater stress on inflation and less worry about the possibility of recession than we've heard from the Fed in the recent past," said economist David Wyss of DRI/McGraw Hill Inc., a Lexington, Mass., forming firm.
"I don't think it means they're going to tighten, but it does mean they're not going to loosen right now," he said.
Mayors criticize cuts in city funds
The Associated Press
WASHINGTON — The U.S. Conference of Mayors yesterday decried proposed cuts in urban funds in the Bush budget, particularly what its executive director called a "turkey list" of reductions in some of the cities' main programs.
"We don't know who wrote it, but mayors are concerned they have been singled out," Thomas Cochran told a news conference about the list.
Cochran, the organization's executive director, referred to a chapter in the Bush budget delivered to Congress on Monday. The chapter, titled "Reducing Investment in Low-Return Programs," calls for spending cuts in mass transit, sewage districts, student aid, low-income energy assistance and other urban programs.
Cochran said the message in the new budget was that urban programs, which have been reduced 82 percent, should be cut again if Bush prevailed
Grant program, particularly was a "serious slap in the face," he said, because it is the only major federal urban program remaining.
A proposed $163 million cut from the $2.9 billion authorized in fiscal 1990 for the Community Development
Cochran said that the conference "would get our forces together" to persuade Congress not to go along with the idea.
At the same time, Cochran said that the budget did contain some positive elements for urban areas including money for Head Start, the Job Corps, homeless programs, AIDS treatment and the war against drugs.
SENIORS: What to do with all your ambition
For graduates with a burning desire to go far, there is a career with far-reaching opportunities. Sales management with the E. & J. Gallo Winery.
Your responsibilities grow as fast as you grow. Fast enough, in fact, for even the most impatient of upstarts.
If you are interested in pursuing a sales management career with E. & J. Gallo Winery, submit your resume to:
Business Placement Office (126 Summerfield Hall) University Placement Center (110 Burge Union)
by Monday, February 5, 1990
- Largest beer selection in Lawrence
•New discount prices
•Over 900 types of wine
1215 W. 6th
843-5281
WELCOME BACK STUDENTS! Schwartz's Liquor
Satisfies you liquor needs for every occasion
ATTENTION ALL STUDENT ORGANIZATIONS:
Student Senate Budget Request Forms for obtaining Senate funding for upcoming school year are now available in the Student Senate Office, 410 Kansas Union.
Back To School SALE!
LEADING EDGE MODEL D
MICROTECH COMPUTERS
with 20 MB Hard Disk
Only $99900
(prices good for in-stock items only)
2329 Iowa, Dickinson Plaza
Only $75900
841-9513
LEADING EDGE®
AUTHORIZED DEALER
Story idea?
864-4810
Val and Tom's Valentine's Day list:
Vat:
- Lingerie:
  - Panties
  - Camisoles & Tap Pants
  - Night Shirts
- Jewelry:
  - 1928
  - Sterling Silver
  - Marcasite & Onyx
  - Heart Lockets
- Baskets @ Snapdeal
**Tom:**
Valentine Boxers
Leather Gloves
Bomber Jackets & Caps
Hats
Formal Wear
Rayban® Sunglasses
FK Men
VIP A.M.A.M.A.R.E.
VIP A.M.A.M.A.R.E.
M.Sat 11:20
Saturdays
11:20 AM - 4:30 PM
Expires 2-4-90
Thermonuclear Protection
You want it .. We stock it!
Bicycle
COLONY WOODS APARTMENTS
INSTANT $200.00 REBATE CONFIRM YOUR NEW LEASE FOR SPRING SEMESTER AND RECEIVE AN INSTANT $200.00 REBATE.
- Swim. Indoor Heated Pool
Short Term Leases Available
- Swim. Indoor Heated Pool
- Exercise Room
- Basketball Court
- Microwaves
- 3 Hot Tubs
- Great Maintenance. We Care:
- Sand Volleyball
Hurry in Today — Take a Look
Make the Choice to Live at COLONY WOODS. $345 one bedroom $410 2 bedroom, 2 bath
- Walk to Campus
- On Bus Route
*Offer Limited/One rebate per lease
Managed with the KU Student in Mind
1301 W.24th
Exactly What is Going On?
Find Out Every Thursday
842-5111
Live Wire THE UNIVERSITY DAILY KANSAN