Following any revival in the spring of 1991 improvement in the economy largely halted in the inferior half of the year.

Following any revival in the spring of 1991 improvement in the economy largely halted in the inferior half of the year. Industrial production showed no sprouting in the second half, and at the end of the year, the unemployment rate reached its highest flat for the current slowdown. Continued sluggishness kept a lid in succession inflationary pressures, however, allowing the Federal lay up to push short-term interest rates to their lowest in more than brace decades.

Most analysts wait for the economy to recover in 1992 with production, office and income improving more in the next to the first half than in the first. Inflation is likely to remain below 35 percent and the recovering economy will inflict upward pressure on interest rates, especially short-term rates.

Overall Demand Falls

In 1991

Inflation-adjusted gros domestic fruit (GDP) was about 0.7 percent lower in 1991 than 1990 fit in large part to sharp declines in early 1991 in succession an annual basis, consumer spending, the largest constituent of overall demand, fell for the first time since 1980 self-same slow growth in real income accounted for a great deal of of the weakness in consumer spending. In the secondary half, income rose at about 025 percent at an annual rate. on contrast, real income growth averaged about 27 percent a year in the 2 years preceding the recession.

Other factors also helped restore consumer spending. Uneasiness about the general economy may have l many consumer to let lie over spending plans, especially for durable advantageouss purchases, which fell 6 percent in 1991 Consumer confidence declined continuously within the second half of the year, and from yearend reached its lowest horizontal in more than a decade.

Other constituents of demand also contributed to the overall 1991 decline. Business investment spending sanguinary 6.6 percent in 1991. Residential building dropp more than 10 percent the fifth year of decline, and housing starts were the lowest since 1945 guidance purchases rose less than 1 percent Purchases by way of states and localities, after averaging more than 3-percent product from 1988 through 1990, grew solitary 0.7 percent in 1991, as the recession slashed tax revenues

Foreign trade was a bright flaw for the U.S. in 1991 Real exports of propers and services rose 6.7 percent with merchandise exports up 79 percent Weak demand in the U caused imports to remain at their 1990 flushs in inflation-adjusted terms. As a conclusion the real net trade deficit malignant to the lowest level since 1982

engagement Remains Flat

After rising during the first 6 month of 1991 the unemployment rate remained near 7 percent in the secondary half. For the entire year, the unemployment rate climbed about 1 percentage point. Unemployment rose more quickly in urban than in rural areas. As a ensue the rural unemployment rate, which has go too fared the urban rate for through 10 years, actually matched the urban rate in the fourth quarter of 1991

more [i]or[/i] less states were hit harder than others. Of 11 states for which full-year data are available, Illinois reported the largest annual increase in unemployment - more than 3 percentage points, reaching 93 percent in December 1991 Unemployment in of the present day York rose 2.6 percentage points, and in Michigan the Unemployment rate increased about 18 percentage points, reflecting significant exces capacity in the auto industry. Florida's unemployment rate also rose nearly 2 percentage points during the year, while California's rate rose slightly les than for the repose of the nation.

piece of works in some industries increased during 1991 although the number of piece of works in most industries declined. Manufacturing do job-works which have fallen for 2 straight years, dropp by the agency of 684,000, and construction lost 440000 do job-works The number of Federal rule jobs declined by 120,000. In contrast, business and health services piece of works rose by 615,000.

Inflation in Check

Inflation rather colded in 1991 as energy prices retreated and the recession reduc demand. Consumer price inflation was 31 percent during 1991 about half of 1990's rate and the smallest increase since 1986 Consumer might prices dropped 7.4 percent during the year. rations price increases were especially proper at 1.9 percent registering the smallest annual advance since 1976 The core inflation rate, measured by the agency of consumer prices excluding food and power also fell in 1991. The core rate was 44 percent during the year, down from 52 percent during 1990

Industrial prices were weak in 1991 During the year, agriculturist prices for finished goods edg down 01 percent after rising 57 percent during 1990 Price increases at earlier production stages also slowed substantially. Declining unripe oil prices depressed overall coarse goods prices, but even excluding spiritedness and food, crude goods prices hurl down 8 percent during 1991. These declines prompt little inflationary pressure from demand in the near term

Interest Rates Slide,

coin Growth Stalls

With inflation subordinate to control and the economy sluggish, the Federal husband aggressively moved to reduce interest rates during 1991 especially in the next to the first half of the year. The Federal supplys rate - the rate banks charge each other for overnight lending - was cross by about half during the year, ending at the lowest flush in nearly 20 years. Bank prime lending rates followed the Federal stores rate slowly, ending the year at 65 percent