Year End Review And Outlook

For Wall Street in 1993, lower interest rates here and abroad and a slowly strengthening U.S. economy were enough to overcome tax-hike worries and Russia's festering crisis. The Dow Jones industrials gained 13.7% for the year. But a slow upward creep in interest rates toward year's end revived worries about the aging bull market's 1994 prospects. Start of Year: Dow at 3,301.11; Nasdaq index at 676.95; 30-year T-bond yield at 7.39%. Jan.: German, Japanese rate cuts fuel economic optimism. Feb.

California's prolonged recession might actually end in 1994--not that most residents of the Golden State would notice. Most economists predict that economic output and employment levels will bottom out midyear, with barely perceptible growth occurring in the second half. So even if it comes, a recovery won't do much to get the beleaguered state back on track. "I think 1994 will be the transition year," said Adrian Sanchez, regional economist with First Interstate Bancorp in Los Angeles.

Pressures for deficit reduction have virtually quashed Bill Clinton's flirtation with a more activist economic policy. Since the demise of the middle-class tax cut, the President's economic program has lurched steadily to the right, nudged along by a Congress seemingly obsessed with budget cuts. That may or may not be good economics, but it's risky politics for a Democrat.

Publishers continued to flood the bookstores in 1993 with books aimed at business people. Out of this free-market free-for-all, 10 titles line up as worthy selections for the thoughtful reader. At the top of this year's list has to be the latest work by our Plato of business management, Peter F. Drucker. His "Post-Capitalist Society" (HarperCollins, $25) recommends itself both for its insights and what is bound to be its ongoing influence on business theory and practice.

This is the year we recognize that we're experiencing the first economic recovery of the information age. Until now, thanks to worries about jobs and lingering recession in some parts of the country, the recovery has seemed dubious and uncertain. But this year there will be national economic growth of 3%, following a burst forward at the end of 1993, and increasing confidence even in California that we are launched on a new pattern for U.S. industry.