USA'S MOST RELIABLE SEER SAYS '92 WILL BE A YEAR OF RECOVERY

The President recently was willing to spend some time with eight economists from the private sector. Odds are that he received eight different solutions to our current economic woes. The other problem with economists is they do tend to be gloomiest just as the economic outlook is about to turn bright again.

Dr. Edward Yardeni, chief economist, C.J. Lawrence Co.

Steve Forbes, of the family that publishes the world's finest business magazine, is as accurate an economic forecaster as there is anywhere. An economic forecasting award given by USX (formerly US Steel) Corp. is known as the "Crystal Owl" award. It is given annually to the economic forecaster whose forecasts prove most accurate among all entries. No other forecaster has ever won the Crystal Owl twice; Steve Forbes has earned the prestigious prize four times. He has therefore earned the right to be listened to, and read, when dispensing such forecasts.

It's worth noting that Forbes's forecast arrived in the issue the mailman brought Monday, December 23. It therefore had to have been written and published before the Federal Reserve announced Friday's dramatic and powerfully stimulative interest rate cuts, which caused one major New York bank to drop its prime rate to a 14-year low of 7.5 percent.

(We recognize that for senior citizens and others living on interest from certificates of deposit, falling interest rates mean lower disposable income. But for young people trying to buy a car or a house, or a small business paying off a mortgage or a line of credit, the lower monthly payments mean a significant increase in discretionary income. Another way to say this is to observe that we could go back to the 21 percent prime interest rate Jimmy Carter left the nation with, and many elderly savers presumably would be happy as clams with 13, 14 or 15 percent on their CDs. But you can't operate the American economy very long, selling houses, autos and refrigerators, on such banana-republic interest rates.)

This is Steve Forbes on the outlook for 1992:

"The cliche about its being darkest before dawn will hold true in '92. The economy will turn around. What will trigger the growth will be what many `responsible' economists, politicians and editorial writers deplore a meaningful tax cut, particularly of capital gains.

"Recognizing that, if he loses the economic battle he loses everything, President Bush will soon be adopting the demeanor he displayed during Desert Storm. He has no desire to start collecting Social Security checks next January. A number of congressional Democrats will also go for a tax cut to show voters they do more than kite checks, stiff restaurants and harass women.

"The economy is ready to roar ahead once the tax underbrush is cleared away. Fabulous new technology (in fiber optics, digital screens, microprocessing, etc.), growing immigration and burgeoning Latin markets for our exports will all be growth catalysts. Also helping the recovery will be low interest rates. Consumers will refinance mortgages, which will increase monthly cash flows. The lower levy on capital gains will raise real estate and equity (stock) values, putting consumers in a more positive mood. Business starts will cease sliding.

"The Dow Jones (which surged 88 points Monday to close at 3022) will go above 3500; if the capital gains tax cut is deep enough, it will easily breach 4000. Long and short-term interest rates will continue trending down. Capital spending will be unexpectedly strong by the fourth quarter. The most immendiate hurdle for prosperity will be the continuing deflation in commercial real estate. By the second half, however, lower capital gains taxes will provide desperately needed relief.

"The election? A politically born-again George Bush will win, although he will be scarred along the way."

(As he should be. PDK)

Malcolm S. "Steve" Forbes Jr., Editor-in-Chief, Forbes magazine, writing in the 1/6/92 issue.

Again, with a little luck and a capital gains tax cut that's deep enough, we'll see a soaring stock market leading a roaring economic recovery by mid-'92.

Now, let's count our blessings, and enjoy a blessed Holiday season. And let's keep the Prince of Peace, the Lord Jesus Christ, at the center of our holiday celebrations.

Merry Christmas, everybody!