Reappraising the 1987-88 Outlook

The economy is in the fifth year of an expansion that has been characterized by a relatively moderate inflation rate, by moderate growth in output, and by the continuation of large trade and federal deficits. Some observers feel that the economy, like Shakespeare’s character Hamlet, is trying to make up its mind and is currently wavering between tendencies toward accelerated growth in output and inflation, or toward another year of moderate growth in inflation and output.