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Economists predictions go from recession to expansion
WASHINGTON - The weather isn’t
the only thing behaving strangely this
winter. The economy has been topsy
turvy as well.
In just two months, December and
January, many economists went from
predicting an impending economic
downturn to believing that the long
est peacetime expansion in history
has found another of its nine lives.
The new general consensus of
moderate economic growth this year
is likely to be an important element in
Federal Reserve Chairman Alan
Greenspan’s testimony before Con
gress today when he reveals the Fed’s
policy targets for 1990. These targets
will have a major influence on inter
est rates and economic growth.
Greenspan could be excused for
expressing a certain amount of per
plexity about recent events.
In December, the economic out
look was as bleak as the unusually
cold weather. Housing construction
plunged; Christmas sales were lack
luster, and the overall economy, as
measured by the gross national prod
uct, turned in its worst showing in 3 1/
2 years.
All that gloom prompted reces
sion worries as economists feared the
impending demise of the seven-year
old economic recovery, an expansion
that has already lasted almost five
times longer than usual.
But in January, the weather warmed
and so did the economy. Housing
construction soared 29.6 percent, the
biggest monthly increase on record.
Retail sales rebounded, largely on the
strength of a pickup in auto demand,
and the economy produced 275,000
new jobs, almost triple the December
increase.
The gtxxi news chased away the
recession forecasts. Some analysts now
look for 3 percent annual growth in
the January-March quarter, six times
the pace from October through De
cember.
“The economy is doing a lot bet
ter than a lot of people thought it
would,” said Michael Evans, head ol
a Washington forecasting firm.
“Everything we have seen so far this
year has been strong.”
Part of the rebound is almost cer
tainly weather-related. The warmest
January on record spurred business
activity, which had been depressed in
December.
But Evans and many of his col
leagues believe that, even taking
account of January’s weather, the
economy is staging a modest revival
from the depressed fourth quarter.
Greenspan, in an unusually candid
comment, said that the chance of a
recession had diminished markedly
since last spring and that the fourth
quarter’s sluggish growth was likely
to prove only a “temporary hesita
tion.’’
Economists believe Greenspan will
restate those views Tuesday and arc
not looking for any immediate credit
easing on the part of the central bank,
especially in light of current infla
tionary pressures.
In January, wholesale prices surged
upward at an annual rate of more than
24 percent, the fastest clip since the
oil shock of the early 1970s. Analysts
are expecting a similarly worrisome
increase in January’s consumer prices,
which will be released Wednesday.
While the inflation spike can be
explained by temporary factors such
as the December freeze, which drove
food prices higher, economists said
the Fed would still find the pace too
troublesome to ignore.
The Fed docs not want to be per
ceived as easing at a time when infla
tion is accelerating, even if those
inflationary pressures were consid
ered to be temporary,” said David
Jones, chief economist at Aubrey G.
Lanston & Co., a government securi
ties dealer.
That could set up a potential clash
with the Bush administration, which
has been complaining over the last
year that the Greenspan-led Fed has
not been aggressive enough in push
ing interest rates down to spur eco
nomic growth.
In addition to releasing the Fed’s
1990 targets for growth of the money
supply, which influences interest rales,
Greenspan will also reveal the Fed’s
economic forecast for the year.
Cheney tells Filipino officials
America might abandon bases
MANILA, Philippines - Defense
Secretary Dick Cheney, shunned
by Philippine President Corazon
Aquino, told Filipino officials
Monday that the United States will
abandon its bases here if it finds
that keeping them is too expensive
or that Americans are unwelcome.
As violence was reported in
several clashes between leftist
protesters and police near U.S.
installations, Cheney met for nearly
three hours with Defense Minister
Fidel Ramos in discussions that
i were described as "very cordial,
very forthright.”
Meeting reporters afterward with
Ramos, Cheney said the United
States “will stay only as long as
the Philippine people wish it to
stay — and only if the terms nego
tiated are acceptable to both par
ties.”
There is growing opposition in
the Philippines to the bases, which
are among the largest outside the
continental United Stales. In 1988
the United States agreed to pay the
Philippines about $960 million to
maintain the facilities until their
lease expired in 1991, but this year
Congress significantly cut finan
cial aid to the bases.
About 200 members of the left
ist League of Filipino Students,
chanting “Yankees go home!”
marched to the U.S. Embassy and
hurled bottles and rotten tomatoes
at police, who charged them with
clubs and tear gas.
One student was arrested and at
least four policemen were injured
in the protest, which occurred near
Cheney’s hotel. Earlier, 50 stu
dents burned an effigy of Cheney
and picketed the military headquar
ters with banners reading “Cheney
warmonger, go home’’ and “White
monkey, go home with your bases.”
In Angeles City, home of Clark
Air Base about 50 miles north of
Manila, about 300 protesters hurled
rocks at club-wielding police who
tried to stop them from disman
tling barbed wire barricades at the
entrance.
Demonstrators said about 30
students were injured.
Relations between the two al
lies have reached new lows in re
cent weeks.
President Cora/on Aquino re
fused to see Cheney, citing the aid
cuts and anger over what officials
consider adverse reports about her
government in the American press.
This year, the Bush administra
tion asked Congress for $360 mil
lion in funding, but the figure was
cut by $96 million, and U.S. diplo
mats say it is unlikely the money
will be restored.
‘ ‘We recognize there is a short
fall of $96 million over what we
had anticipated,” Cheney said. ”1
also pointed out that in East Asia,
in this part of the world, the United
States provided a little over $600
million, and about $500 million of
that comes specifically to the Phil
ippines.”
Cheney pledged his “best ef
forts” to restore funding cut by
Congress. He also denied reports
in the Philippine press the cutbacks
signal diminished support for the
Aquino govemmert.
Ramos acknowledged the U.S.
administration needs congressional
approval for aid commitments, but
said he told Cheney ‘ ‘time is of the
essence” in meeting obligations.
Asked whether Filipinos wanted
die bases to remain, Ramos de
clined to answer, saying the issue
was under discussion in the Philip
pine Congress.
U.S. and Filipino officials arc
expected to begin talks soon on
extending the bases. Any agree
ment must be approved by two
thirds of the 23-mcmbcr Philip
pine Senate, where anti-bases sen
timent is strong.
No date for the talks has been
set, and leading Filipino congress
men have urged Mrs. Aquino to
postpone them until the cuts arc
restored.
Officials say natural carcinogens
more dangerous than chemicals
NEW ORLEANS - Natural car
cinogens in meat, grain and other
foods are a far greater danger than
pesticides and additives, accounting
for more than 98 percent of the cancer
risk in the diet, a government scien
tist said Monday.
Even a minor reduction in these
naturally occurring hazards, he said,
would surpass the benefits of elimi
nating all traces of dangerous man
made chemicals.
The culprits include not only such
recognized health hazards as fats and
beer but such seemingly innocent
products as bread, yogurt, mushrooms
and many spices, including cinna
mon and nutmeg.
“The risk is from natural carcino
gens in the diet, because they over
whelm all the others,” said Dr. Robert
Schcuplcin, director of the Office of
Toxicological Sciences at the U S.
Food and Drug Administration.
He contended that the public is
worried about the wrong risks in its
diet, in part because of exaggerated
news accounts of such scares as Alar
tn apples, cyanide in grapes and di
oxin in mux.
Schcuplcin based his conclusions
on a statistical analysis of the quan
tity of cancer-causing agents in the
diet.
He said that the risk of dying from
cancer from dietary exposure to both
natural and manmade carcinogens, or
cancer-inducing substances, was 7.7
percent. The risk from naturally oc
curring carcinogens alone was 7.6
percent.
“Most of the risks arc people’s
i personal choices,” Schcuplcin said.
> “They arc not imposed on people by
corporations. Apparently lhat’sa hard
r lesson. People want to blame somc
I body.”
h Schcuplcin presented his findings
-t at a meeting of the American Asso
ciauon for the Advancement of Sci
ence.
Dr. Frank Young, a former FDA
" commissioner who is now deputy
* assistant secretary of Health and
Human Services, said he agreed with
Schcuplcin’s contention.
‘ The headline should not be,‘All <
j Foods Cause Cancer’or‘Drop Dead. <
Don’t Eat,”’ Young said. “The good
news is, let us not as a nation focus
just on the technological food addi
tives. We ought to focus on the big
issues as well.”
Schcuplein said the clearest can
cer-causing agent in ordinary food is
fat, which has been linked with sev
eral kinds of tumors. However, he
said most foods now eaten would not
pass safely tests required for new
food chemicals and additives.
He estimated that carcinogens make
up one-tenth of 1 percent of the food
people cat. Among concerns he cited
were:
•Wcll-cookcd, high-protein foods,
such as meal and eggs, contain bacte
rial substances that can cause genetic
mutations. An ordinary day’s protein
can be as damaging to the genes as
five cigarettes.
•Hazardous urethane is a natural
product of fermentation. It is present
in beer, yogurt, bread and other foods.
•Mycotoxins produced by molds
arc common in many foods, espe
cially when stored in warm, humid
conditions. Aflaloxins occur in corn
and peanuts, /caralenonc in soybeans
diiu ill yciiuw iicc.
•Smoked or sailed fish and pick
led vegetables may cause digestive
cancers. This is attributed to nitrates
and funguses.
•Grilling and charring fish or meat
can produce potentially hazardous
substances, such as nitropyrencs.
•Many spices contain question
able substances. There iscstragolc in
tarragon, eugenal in cloves, cinna
maldchyde in cinnamon, myristiem
in nutmeg and anethole in fennel.
Several spices, including oregano,
marjoram and bay leaves, may cause
genetic damage.
•Other naturally occurring carcino
gens include d-limonene in oranges,
psoralens in celery, hydrazines in
mushrooms and nitrates in spinach.
“Even a modestly effective at
tempt to lessen the dietary risk of
natural carcinogens would probably
be enormously more useful to human
health than regulatory efforts devoted
to eliminating traces of pesticide resi
dues or other specific trace-level
:hcmicals,“ Schcuplein said.
Kohl makes peace between ministers
BONN, West Germany - Chancel
lor Helmut Kohl made peace between
his defense and foreign ministers
Monday on the NATO role in a united
Germany, while Germans exiled from
areas now in Poland demanded their
homelands back.
Foreign Minister Hans-Dietrich
Genscher and the defense minister,
Gerhard Stoltenberg, issued a state
ment at Kohl’s request saying neither
soldiers from the alliance nor West
German troops should be stationed in
what now is East Germany.
Stoltenberg suggested on Friday
that NATO defenses be applied to a
“whole Germany.” Genscher said
the defense minister was “causing
unnecessary irritation where a subtle
touch was needed.”
In East Berlin on Monday, most
participants in weekly talks between
the government and opposition spoke
against NATO membership for a united
Germany and said it should be de
militarized.
As a precondition for reunifica
tion, they said, East and West Ger
many should issue a joint statement
guaranteeing Poland’s borders and
giving security assurances to other
European countries.
About 50,(XX) East Germans who
favor a rapid union participated in the
weekly rally Monday at Leipzig, a
center of the pro-democracy move*
ment.
Hans Modrow, East Germany’s
Communist premier, told opposition
leaders he would not go “on his knees’’
for interim aid from West Germany.
At meetings with Kohl and other
West German officials last week in
East Berlin, Modrow asked for 15
billion marks ($9 billion) in “solidar
ity aid” to tide his government over
until the nation’s free elections on
March 18.
Bonn refused on grounds that East
Germany would not disclose its fi
nanc ial condition or accept an offer to
make the West German mark the
currency of both countries. West
Germany did provide the equivalent
of about S3.5 billion in aid for proj
ects over which East Germany will
have little control.
Negotiations on economic and
currency union begin today in East
Berlin, although Modrow’s govern
ment has made clear such a step can
not be approved before the elections.
Dieter Vogel, government spokes
man in Bonn, told reporters Kohl
summoned Stoltenberg and Genschcr
to the chancellery Monday. Thci
statement repeated assurances Kot
made during talks in Moscow wit
Soviet President Mikhail Gorbache>
who favors a neutral united German}
Genscher and Stoltenberg, wh
represent different parties in the gov
eming coalition, said no NATO unit
or facilities would be extended inti
what is now East Germany.
They said that included Wes
German troops under NATO com
mand and those not directly assigns
to the alliance, such as territory
defense units.
Last month, Genscher suggeste
what now is West German territor
remain part of NATO and the are
east of the Elbe River, now Ea.<
Germany, be militarily neutral.
Stoltenberg’s signature on the joir
statement with Genscher effectivcl
reversed the position the defens
minister took Friday, that NATO troop
defend all of united Germany.
“The security policy of the are.
now comprising East Germany in al
its aspects is to be determined will
the freely elected government of Eas
Germany as well as with the fou
powers responsible for Germany’
since World War II, it said.
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