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Looser Fiscal Handcuffs

Economic Trends


Worried that coming federal budgetary restraint could imperil the U.S. expansion? Don't be, advises economist William V. Sullivan Jr. of Dean Witter Reynolds Inc., who argues that "the vibrant effect of state and local spending" will save the day.

Sullivan points out that real state and local outlays in the national income accounts rose by nearly $17 billion between the second quarter of 1994 and the third quarter of 1995, even as federal spending contracted by $6 billion. Since such outlays now represent nearly two-thirds of total government spending and are on a steady upward course, he believes that they will prove "more than enough to offset any downward pull from federal fiscal restraint in coming quarters."BY GENE KORETZ

Coke's Big Fat Problem

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