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ted Federal spending--if government refuses to tighten its own belt-will also be far too high and could weaken and shorten the economic recovery now underway.
This recovery will bring with it a revival of economic confidence and spending for consumer items and capital goods--the stimulus we need to restart our stalled economic engines. The American people have already stepped up their rate of saving, assuring that the funds needed to modernize our factories and improve our technology will once again flow to business and industry.
The inflationary expectations that led to a 21 1/2-percent interest prime rate and soaring mortgage rates 2 years ago are now reduced by almost half. Leaders have started to realize that double-digit inflation is no longer a way of life. I misspoke there. I should have said "lenders."
So, interest rates have tumbled, paving the way for recovery in vital industries like housing and autos.
The early evidence of that recovery has started coming in. Housing starts for the fourth quarter of 1982 were up 45 percent from a year ago, and housing permits, a sure indicator of future growth, were up a whopping 60 percent.
We're witnessing an upsurge of productivity and impressive evidence that American industry will once again become competitive in markets at home and abroad, ensuring more jobs and better incomes for the Nation's work force. But our confidence must also be tempered by realism and patience. Quick fixes and artificial stimulants repeatedly applied over decades are what brought us the inflationary disorders that we've now paid such a heavy price to cure.
The permanent recovery in employment, production, and investment we seek won't come in a sharp, short spurt. It'll build carefully and steadily in the months and years ahead. In the meantime, the challenge of government is to identify the things that we can do now to ease the massive economic transition for the American people.
The Federal budget is both a symptom and a cause of our eco