Citicorp Chairman Walter Wriston yesterday said that an economic recovery beginning early next year will be "sharper and a little more robust" than other observers are predicting.
Appearing on CBS's "Face the Nation" (WDVM-TV, Channel 9), Wriston cited November's sharp jump in sales of U.S.-made autos and "increased activity" by millions of users of credit cards affiliated with Wriston's massive bank holding company as signs that a recovery might be under way. The "innate strength of our economy is always underestimated," he added.
"I believe the building blocks are being put in place to have one of the most sustained good recoveries in this country that we've had since the '60s," he said, noting that the Federal Reserve Board's efforts to pump money into the nation's financial system during the last six weeks "will almost assure that that will happen in the first quarter of next year."
He also dismissed the possibility that continuing signs of rising federal deficits might block the beginnings of a recovery by driving up interest rates or rekindling double-digit inflation. "High deficit expectations do not necessarily create higher interest rates," he said.
But Wriston, who also serves as chairman of the administration's Economic Policy Board, said the federal deficit will only be cut after the economy picks up. He said he did not know precisely what the appropriate federal deficit should be, but when "you put people back to work that deficit will melt away very rapidly."
Wriston discounted fears that the world financial situation and in particular the difficulties faced by less developed countries in meeting bank loan payments is at a crisis point.
The chances of a major international financial collapse "are about as close to zero as anything that human beings can predict," he said. The international financial system is "extremely strong. We have written off more loans at home than abroad."