European Stars And Stripes (Newspaper) - April 5, 1986, Darmstadt, Hesse                                Bypassed by America s economic upturn by Robert Pear new York times though most americans appear to be benefiting from the nation s robust economic recovery economists say that at least 10 million to 15 million Are receiving Little direct gain. In his state of the Union message president Reagan described the recent experience of the United states As an economic Miracle that saw the Economy grow for 40 consecutive months adding More than 9 million jobs and raising total employment to 110.3 million. The inflation rate plunged from More than 12 percent in 1980 to 3.8 percent in 1985, and a Sharp decline in Oil prices this year seems to guarantee continued Low inflation. But Samuel m. Ehrenhalt the regional commissioner of the Bureau of labor statistics in new York said even in this period of rapid economic growth there Are still people who have been left out of it who Are not in the mainstream who Are not even in the minor eddies of the Economy. This group includes people who Are not in the labor Force Many female Heads of household High school dropouts especially Young Blacks and Middle aged men who have been displaced from their jobs and not found their  of course even those without jobs May receive indirect benefits from the economic recovery. For example state officials May be More willing to increase welfare benefits. After adjustment of the statistics to account for inflation the median state welfare Benefit for a family of four Rose last year by 1.7 percent to $399 a month. This was the first real increase since 1976, according to a reference Book issued by the . House ways and Means committee. But Aaron a. Walker sr., a 35-year-old Man who lives at a shelter for homeless people in Washington d.c., said it irritates me to hear Reagan talking about the strength of the Economy. The Economy does t do anything for the homeless. Nothing trickles Down this far. We Are  s. Anna Kondratas an economist at the heritage foundation a conservative research Institute in Washington said lower inflation benefits everybody and economic growth creates new Job opportunities. But a Large proportion of people living below the poverty level cannot be directly helped by economic growth because they Are elderly or disabled or too Young to  she estimated that at least 10 million to 15 million people were not directly helped by the economic recovery. Other economists said this estimate was conservative. Sar a. Levitan the director of the Center for social policy studies at George Washington University put the figure at 20 million to 30 million. How is it possible that millions of americans May still be experiencing hardship after More than three years of sustained economic growth in part Levitan said it is because we started from a very Low base the deepest recession since world War  Susan e. Shank and Patricia m. Getz economists at the Bureau of labor statistics said in a recent article that jobless rates for virtually All worker groups at the end of 1985 were still above those prevailing just before the Onset of the 1980  for men of prime working age they said the unemployment rate was about one and a half times higher in 1985 than in 1979." the rate for men 25 to 54 years old soared from 3,6 percent in the fourth Quarter of 1979 to 9.1 percent in the fourth Quarter of 1982, then declined to 5.4 percent in the final Quarter of 1985. The situation in new York illustrates How the recovery has bypassed Many people said Ehrenhalt. New York City has done very Well in the last few years he said but there Are apparently limits to the payoff we can expect from economic growth. Only 51 percent of the City s working age population is employed As against a National figure of 61  what has happened is a massive change in the inextricable often volatile relationship of interest rates and inflation. The United states has completed four years of 4 percent annual inflation one third the rate that prices climbed in the 1979-1980 period. And Over the past year or so that sustained improvement has finally persuaded Long term lenders that they can begin to whittle Down the inflation Premium they build into the Price they charge for Money. As a result the Homeowner s monthly payment on a 30-year, $100,000 mortgage has plunged to $840.87 at the 9.5 percent level current in Many parts of the country from $1,264.44 five years ago when the rate was 15 percent. That s about $5,000 extra a year to save and to spend a boost to All beneficiaries of the Homeowner s largesse from furniture salesmen to travel agents. And most other borrowers Are reveling in the lower rates from the corporations that borrow to expand their plants and work forces to the debtors of latin America. The Banks prime lending rate on which they base their Loans has dipped m like to read the financial Section just before retiring i sleep better knowing the country is doing so Well to 9 percent less than half its 21.5 percent Peak in the Winter of 1980 and 1981. Top rated corporate Bonds Over 15 percent at their highs in 1981 and 1982, were Down to 10 percent at the end of last year and now Are flirting with 8 percent. Automobile Loans were 16 percent in 1981 now they Are a bit under 12 percent. So called real interest rates the rate after deducting the inflation Premium built in by lenders have been Cut in half in the last few years. So far the Only rates that have not budged much Are those for personal Loans which seem mired in the High teens and credit card balances at nearly 19 percent. Bankers say that those Loans Cost them More to manage and that they Are unsecured by stocks real estate or other property so they Are always High. But in time they say the tidal push of lower rates will Force them Down too. Behind the drop in rates economists cite a Confluence of forces pushing in the same encouraging direction for the first time in 20 years. Interest rates inflation growth rates and the Exchange rates of currencies of major nations Are in better balance than they have been in years. They attribute the Confluence mostly to two powerful sources. One is the apparent reversal in the course of the american budget deficits the major culprit Many economists say behind High american interest rates the High Dollar and major imbalances in the world Economy. Most politicians doubt that the deficits will fall to absolute Zero five years from now As required by the Gramm Rudman Hollings balanced budget Law. A major source of falling rates is the change in the International economic policies of the Reagan administration from a posture of indifference about How other nations manage their economies to a politically driven need to Tell them what to do. It needs them to push their rates Down along with american rates. Otherwise the Dollar would Rise again making imports Rise at the peril of american jobs. The first big signal of the administration s new policy was the five nation statement last september that the Dollar had climbed too High and that the group was prepared to drive it Down. Then Early this year the Federal Reserve Bank in concert with Japan and West Germany Cut the discount interest rate that it charges Banks from 7.5 percent to 7 percent one half its Peak in 1981 and the lowest level since 1978. Some pessimism remains. I think the conventional Wisdom about everything getting better right now is full of baloney said Sam Nakagama a Wall Street economist and pamphleteer. Oil producers spending has to drop instantly which is going to produce a severe deflationary Shock. You be got a recession in the Oil Patch and in Mexico. You be got a farm recession. Lower rates and inflation eventually will mean a sounder Economy but we have to get there  saturday aprils 1986 the stars and stripes Page 13