European Stars and Stripes (Newspaper) - December 22, 1985, Darmstadt, Hesse                                Sunday december 22, 1985 the stars and stripes Page 19 business news economists fear . Recession in 87 Washington a the United Stales should enjoy slightly better eco nomic growth next year but a recession looms As a growing possibility in 1987 with a great likelihood the downturn will either be triggered or made worse by the new balanced budget Law the nation s business economists said this past week. The National association of business economists said its latest poll of 300 of its members found an overwhelming 85 percent believe the country will be in a recession by the end of 1987. Only 15 percent of those polled believed the current recovery which is now entering its fourth year would survive into 1988 or beyond. The economists also expressed Little Confidence in the legislation Congress passed last week requiring a balanced budget by 1991. A substantial majority 59 percent said they did not believe the balanced budget Bill was an effective Way to re Duce soaring Federal budget deficits objecting in part to the automatic nature of the cuts. The problem As the economists see it. America s corporations us can t keep a secret by John Cunniff a business analyst new York the corporate world is having an even worse time than Uncle Sam in keeping its secrets and the three Day. S16 sunup in the Price of Ria share is the latest example. The securities and Exchange commis Sion the new York Stock Exchange and the Chicago Board options Exchange arc investigating that jump and the wild Trad ing that occurred just hours before Gener Al electric announced it was buying Ria. In this instance it is obvious that Many people knew something big was brewing. The numbers Are the evidence. Close to 9 million shares of Ria were traded on the nose in just three Days 3 million a Day a sum equal to the total average daily volume of every nose Slock 1,143 of them just 25 years ago. In those three Days the Price of Ria shares Rose More than $16 to $63.50, or More than 30 percent which is the kind of return that any average investor might Hope to make in three years or so rather than three Days. Such numbers make it obvious that there was lots of insider trading leaving the investigators plenty of time to work on the bigger questions who did the trading and How did they get the information whether they get the answers is another matter because in some instances it is All but impossible to prove a Case. It is unlikely that any corporate officers or directors of either company were involved because that would be too blatant an offence. But How about the Friend of an Uncle of a Secretary who knew her Boss Wasal a big Ealing solid information in t even needed just a him. Wilh Hal hint those who closely follow the affairs of companies can come to reasonable conclusions thai some thing important is at hand something big enough to change prices. It in t the Only Type of secret Hal corporations arc finding impossible to keep. How do you prevent an Engineer from Tak ing his mind and All thai is in it to a competitor How do you prot Cal yourself from i Rales who copy your product and Lake your profits How do you protect copy right information the latter problem also involves these purities markets where brokers have been caught stealing proprietary information researched and developed by Independent sources and using it As their own or to Fromolc sales. It is widely practice bul nol Oflyn walked about. It is so climes called the dirty Lille  one company Princeton economic consultants found thai its High priced re porn a subscription to which in filled inc recipe incl to additional data by Telephone was being duplicated and circulated freely by a broker. As a consequence in was forced to sue and to spend $100,000 for a new Telephone by slim that can be accessed As they say in the computer world Only by a 10-Digil code assigned to the subscriber. The 10-digit code might have solved thai particular problem bul How do you solve breaches of the moral code or the misuse of information to unfairly exploit the marketplace and the people and inst Lucions in it is that Federal budget cuts will reduce the stimulus needed to drive the econ omy Forward and that the alternative raising taxes also would retard economic growth. There is no question that our Mem Bers think that 1987 is the most Likely year for a recession said Kathleen Cooper president of the association. If we Start to Cut spending or raise taxes during 1986. It is going to make 1987 an even rougher  she said Many of the business economists believed the budget cuts or tax increases could actually push a weak Economy into a recession. Despite the potential Impact in 1987, Cooper said there had been positive Short term effects already from the balanced budget legislation. Like other economists she credited the Strong ral lies in both the Stock Market and Bond markets to Confidence the proposal would Lead to lower interest rates and a stronger Economy in the months ahead. The business economists at least through next year agree with the assumptions of the financial Market fore casting stronger growth for 1986 than  did in an earlier Survey. Economists arc beginning to Sec signs of a revival in the Economy including a stronger Stock Market and this makes us believe that the near term is going to be stronger than we thought just three months ago Cooper said. Among the forecasts contained in the Stock pulse United press International Coper Lam ins Friday december 20 nose composite Molt actives by volume Slock div vol close earns be old a run s 4.321.100 62us79i 10 3 at to 3.164.800 25 h 139 Iso 4 unc arb 3,075.900 72 � i in Mil de 2.256,500 291 4 54 70 10 Texaco 2,110.300 30 i 1.47 210 9 ism 2.128,100 154". 916 160 2 Reylon i 1,/yj.luo 31" 4� 70 4 a exc 1,648.600 s2v, 3.12 17.0 2 fed Nimi 1.642,500 25 � 0 Exxon 1.616.100 54" s.s3 9.0 6 nose composite Larvel not charges Suo Slock Holly Capucci to done Disney Dover Nacial in lev can Bell Alexandra pm close chg earns be y i09� to 7v, 0 16 615.0 0 229 302 3vi h3 / 3h 44 3 70v. 2 142" 2 4 56 1 21. 3914 2� 28". 2h 10.77  46.17 70 5.15 22.0 2.65 170 7.84 90 1088 14.0 30 5.97 9.0 5 5 0.87 460 3.03 90 103 latest Survey the Overall Economy As measured by the Gross National product will grow 2.9 percent in 1986. While this would be an improvement Over the expected 2.5 percent rate of growth this year it still would be far fallow the 6.8 percent expansion in 1984. The Reagan administration is forecasting 4 percent growth next year. Inflation will remain in Check with consumer prices rising at a 4 percent Rale next year up Only slightly from the expected 3.5 percent increase this year. Six months ago the economists were predicting 1986 inflation would reach 4.5 percent. Despite the j slightly improved growth rate unemployment will remain stuck where it is now averaging 7.2 per cent in 1986, the same As 1985. Interest rates As measured by the Benchmark prime rate will end next year right where they Are now at 9.5 percent. Just three months ago the economists were predicting interest Rales would go higher with the prime rate Hilling 10 percent. As for when the next recession will begin 37 percent of the economists surveyed said it would Starl sometime in 1986, while 46 percent pegged 1987 As the Likely starting Point. Fifteen per cell said icy believed the current recovery which began in december 1982, would last Inlo 1988 or beyond. Am a composite most actives by Velum Slock div vol close earns be old Wicks 726,100 4 i 078 60 Bat 618,60047-16066 7.0 33 Langub 376.300 9 08 Bush kinds 336.300 7 111 7.0 tie comm 280.200 6 n Amdahl 234.600 13 068200 14 Adobe Oil 180.800 3 034 110 75 Consol sir s 162.900 14h 063730 nip Dev 142,200 ib1. 06 keep or 139,500 ii 056200 18 amex composite Larzett net change Slock close Choe earns be old am Oiler Ion 3 i 1.27 80 14 Lam Abc 17. 3� 1.74100 35 Marlin Prol 43 2". I 54 410 Bic 27 ? of 2"i 1.11 150 Teion 247 2 0.08 3162  Kay in 1� 182 10.0 ii anytime 49". I l 279 180 12 Sheryl so i3"i 4 i 023 590 2.1 Iraq vol fid 35 i 098360 Cameo 16 f in 157 100 28 be Price to Ean Switz ratio Yod dividend Vodd of deficit or omd in Slock Eaton latest 12 months unaudited investor s guide by William Doyle o. 1 am increasingly puzzled by newspaper reports that the inflation Rale is decreased from above 13 percent five years ago to about 3.5 percent Over the past 12 months. I fail to see Bow i Benefit from this. Most item Mem to Cost just As much As before. Some notably electricity Telephone water insurance medical and other services seem to Cost  you give Roe some idea of Bow the government determines the inflation rate. A. The most widely used yardstick of inflation is the consumer Price Index. That Chi. Intended to measure changes in the Cost of living is calculated by the led Cral Bureau of labor statistics and the results Are made Public monthly. The bus uses the prices of More than 350 hems in the Chi. The government Bureau explains those Are items us surveys have found to be in inc Market baskets of Urban Consumers. In other words those Are the goods and services including those you Mtnlion Mosi the gov Crimeni Cal hcs Flack from some critics who contend the Chi is out of whack by being weighted too heavily with some items and not enough with others. Well leave that argument to economists. Put six practitioners of thai dismal science in the same room and you la get 12 different opinions. Indeed costs of the things you cite and Many other items have gone Way up. But prices of still other goods and services have come Down or have risen Only slightly. The change in the inflation rate from More than 13 percent to some 3.5 percent does t mean thai the Cost of living decreased. It Means thai the Chi Rose about 3.5 percent in the most recent 12 months. That tells you that although prices Aren t rising nearly As rapidly As they were they arc still going up. The Cost of living in t coming Down. Even at a 3.5 percent inflation rate it doubles in less than 21 years. That makes life Lough for re lived folks and others who have to live on fixed income. We won l have a decline in inflation unless inc Chi shows negative rather than positive numbers. Consid ering the Way inc Federal gov Crimeni spends Money Don t count on that happening. Q. Are there any investment clubs that make Slock purchases through monthly payments would there be a Way for me to find out about them Abo can they be used As an individual retirement account a. An invest Mcnol club is a method through which a group of people get together Pool their Money and buy stocks and other securities. Most such clubs collect monthly dues and a decision is made by majority Vole of members on How to invest it. You can obtain Basic information by writing to National association of invest Mcnol clubs 1515 East eleven mine Road. Royal Oak Michigan. 48067. The association May be Able to put you in touch with a club in your area. If you join such a club you la probably learn quite a Bil Aboul iras. A Basic purpose of an investment club should be to educate its members in All things financial. However you la have to set up your Ira As your own account nol As part of a club s pooled . Q. My husband died two years ago leaving me some stocks and Money in an account at a brokerage firm. 1 understand that it is nol federally insured. Is it Safe a. Every brokerage firm doing business with the pub Lic is required to be a member of securities investor prot Calion corp. S1pc, establish cd by acl of Congress guarantees Hal securities and Money in each customer s account up to $500,000, no More than $100,000 of which can be Cash will be returned to the Cusco mar if the brokerage firm goes bankrupt. However this does nol pro incl you against Markci  if the Market values of stocks or Oiher so Curilich in your brokerage drop you la lose Money. On the other hand if the values of your securities go up. You la make Money. Kino features columnist do to welcomes written questions but the can provide answers Only a Lough the column. You can write to him in Caro of the stars and stripes Apo 09211. Us forces