Newspaper article THE JOURNAL RECORD

Reagan's Economic Views Justified by End Results

Newspaper article THE JOURNAL RECORD

Reagan's Economic Views Justified by End Results

Article excerpt

His optimism was out of style with much of the investment community and the economic fraternity throughout his term in office, but in retrospect his view seems justified by the results.

The Dow Jones industrial average produced a 16 percent average compound investment return during his two terms, and the bond market's 10 percent real rate of total return was the best for any presidency since Warren Harding's.

As the president said in his farewell address, ``We weren't just marking time; we made a difference.''

A great many of the investment talent in Wall Street and the economic brains of academe and business didn't really believe him, though, and you can find it imprinted on their record year after year during the 1980s.

While he exuded hope they issued warnings.

It was a regular ritual: When the annual White House economic forecast was issued it was instantly discounted as overly optimistic. Sometimes it was, but maybe it was intentional - a challenge to work for, rather than an easy mark.

Throughout eight years the warnings came from Wall Street about inflation, recession, monetary collapse, niggardly corporate earnings, the weaknesses of the manufacturing sector, the budget deficits. Disaster seemed imminent.

Maybe Reagan was lucky to escape the disasters, and there are grounds for believing that some of the financial disappointments of his administration might adversely affect the economy for years to come.

Still, there was a job to be done when he entered office and it couldn't wait. The recession of the early 1980s was by some measures the worst since the Great Depression of the 1930s. Moreover, confidence was shot.

The great American manufacturing machine was in its own private depression, outmatched both domestically and abroad by newer entrants in the world marketplace. …

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