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Delivered to the Atlanta Rotary Club, Atlanta, Georgia, January 24, 1994
IT is a great pleasure and privilege, as always, to appear before the world's greatest Rotary Club to present my annual remarks on the economic outlook. Last year was quite an eventful and encouraging one. It was also one that brought on many challenges for the future, so much so that I hardly think I can do justice to the whole picture for 1994 in my allotted 20 minutes. Nonetheless, I shall do my best.
I am optimistic and upbeat because, at long last, the nation is taking major steps toward solving long-term problems. Among the promising signs, I count four areas: first, inflation, with the clear success we have had in bringing it down to a much more acceptable level than at the beginning of this decade when the CPI rose 5 1/2 percent; second, the budget deficit, with the plan passed last year to begin dealing with it; third, international trade, with the successful conclusion of the North American Free Trade Agreement (NAFTA) and the Uruguay Round of the General Agreement on Tariffs and Trade (GATT); and fourth, health care, where the debate has only just begun.
I am immensely encouraged that our nation is beginning to grapple with these issues, which it had put off during the 1980s. The reason I am so encouraged is that, if continued, these investments in our future will benefit us long beyond my time and yours. The result should be moderate and steady growth -- not as heady as in much of the '80s, but certainly more sustainable.
Of course, this would not be my annual Rotary speech if I did not have some areas of concern to point out. In the midst of the positive steps we have taken as a society, I sense a deepening distrust of public policy institutions. In my talk today, I would like to discuss how this distrust, if left to fester, can hamper the great progress this nation is making on long-term issues. Before I turn to this topic, let me review current economic conditions and the outlook for 1994.
For those of you who keep score, my outlook for gross domestic product (GDP) in 1993 was right on the money. I said it would expand by close to 3 percent, and the final numbers look like they will come in at around 2.9 percent. If anything, the economy did better than I forecast for both inflation and unemployment. As measured by the consumer price index, inflation averaged just below 3 percent. I said it would be shaded a little above 3 percent. As for unemployment, I said it should come down and average around 7 percent, and the annual average was close to 6.8 percent.
Looking ahead to 1994, I believe we will have another good year of moderate growth with GDP expanding a bit more than 3 percent on an annual average basis. I expect inflation, as measured by the …