A Helping Hand? After Many U.S. Pleas, Bonn and Tokyo Seem Ready to Spur Growth --- But What They Might Do, How Effective It Will Be Remain Much in Doubt --- Dollar Could Drop Further
Ask an American business forecaster where the U.S. economy seems headed -- up, sideways or down -- and the response will probably begin with another question:</br></br>Will West Germany and Japan take solid steps to stimulate their own economies? If they do, expansion in the U.S. will persist and strengthen. If they don't, the present sluggishness may well give way to a full-scale slump and rampant U.S. protectionism.</br></br>In earlier years, the forecasting fraternity's overriding interest was, not surprisingly, in possible policy moves in Washington. But now, forecasters increasingly sense that the U.S. economic outlook over the next year or two, at the least, hinges mainly on decisions taken not in the U.S. capital but in faraway Bonn and Tokyo.</br></br>How willing are officials in the two foreign capitals to adopt more-stimulative measures? And, in pursuit of a peppier U.S. economy, how hard are Washington's policy makers -- with political as well as economic considerations in mind -- really pushing to get their way?</br></br>There are no easy answers to such questions, and interviews in three capitals and New York turn up surprises. But the most likely development -- a welcome one for U.S. economy-watchers -- appears to be that Bonn and Tokyo will indeed act soon to spur their economies more vigorously. Likely steps range from heftier government spending to interest-rate cuts, possibly within a month.