Contrary to the popular economic outlook, we remain optimistic. Aside from fuel costs which will come down, inflation is still not a factor. The dollar is at near-record lows, so exports should boom while oil production is being boosted daily.

DOLLAR DOWN, EXPORTS TO RISE. For a multitude of reasons, the U.S. dollar has fallen to a post-World War II record low against the German Deutsche-mark and to its lowest level against the Japanese yen in over a year and a half. While this may be bad news to some, the last time the dollar was at this level our exports soared.Since April, the dollar has fallen by 18 percent against the Japanese yen, 17 percent against the British pound, 10 percent against the German D-mark and 2 percent against the Canadian dollar.

If the dollar stays at present levels against other countries, you can expect American manufacturers to start shifting assembling and production back to the states and away from the world's traditionally cheap labor markets. This would help sustain U.S. employment levels.

"When the price is right, or even close, the skill and education of the American labor force and U.S. technology can compete very effectively," said Sy Stewart, a major furniture industry manufacturer.

Could our international trade deficit balance out in 1991?

OIL UPDATE: Oil-producing countries are seeking whatever means at hand to increase their output.

In September, Saudi Arabia pumped out 7.63 million barrels per day (bpd). Saudi production targets for October are 7.8 million bpd. This means that, by themselves, the Saudis will have replaced 75 percent of the combined oil production of Iraq and Kuwait. The Saudis also are boosting their refining capacity significantly.

Meanwhile, Alaskan oil producers announced that they are planning to construct a new oil production facility which, when completed, will increase Prudhoe Bay oil output by 100,000 bpd. The Prudhoe Bay field is North America's largest oil reserve, with an estimated 22 billion barrels.

As oil keeps getting harder to extract, oil companies also are going to be using a new method of drilling called "fracturing" which would crack oil-bearing rocks. This should increase production by another 50,000 bpd. And, two mothballed fields have been put back on line, adding yet another 25,000 bpd.

QUALITY DOESNUT FAIL. Credit unions (CUs) are filling part of the void left by the failing S&Ls. CUs are non-profit, member-owned cooperatives that have remained healthy during these troubled times for financial institutions. In fact, more banks and S&Ls have failed in the past year than credit unions in the past five years.

"CUs haven't experienced the problems of S&Ls and banks, because we make the safest loans around: consumer and mortgage loans to our members," said Jerry Karbon, spokesperson for the Credit Union National Association. "CUs aren't in the business of making large, high-risk loans for leveraged corporate buyouts or loans to foreign countries."

Member deposits at CUs are backed by the federal government just as they are at banks and S&Ls. The protection provided the consumer is identical.

A significant difference between the CU fund and the funds that insure banks and S&Ls is that CUs must deposit an amount equal to 1 percent of their insured deposits in the National Credit Union Service Insurance Fund, and they must adjust this deposit annually. Interest income earned on these deposits build the fund and cover losses if a credit union fails.

To date, all losses from failed CUs have been covered by the interest earned by the insurance fund, without touching the fund's principal. The American consumer hasn't had to pay a dime to prop up any credit union.

"In the extremely unlikely event that the National Credit Union Association would need to dip into its principal, the credit unions would immediately be required to replenish the insurance fund," Karbon says. "In this way, all the capital of the credit union movement stands ahead of a taxpayer bailout. The premium-based funds that insure banks and S&Ls don't have this feature."


CONSUMER INSTALLMENT CREDIT was up $2.1 billion in August to a level of $731 billion. Annualized, this represents a 3.4 percent rate of increase, which is hardly indicative of a hot, inflationary economy.

The UNEMPLOYMENT RATE in September rose to 5.7 percent, the highest since February of 1988. An additional 110,000 jobs were lost last month, but 42,000 of them were temporary census workers. This was still the biggest drop in jobs since June of 1986.

Factories continue to lay off workers; 520,000 factory jobs have been lost since January of 1989.

JOB GROWTH cushioned some of the blow from the rise in unemployment. The number of employed persons rose by 240,000 in September to 117.898 million, up 0.2 percent over August and 0.4 percent over a year ago.


Mortgage rates were down in the United States this week. The 30-year fixed-rate mortgage dropped from 10.23 to 10.15 percent, the 15-year fixed from 9.92 to 9.86 percent, and the 1-year ARM from 8.31 to 8.27 percent.

Reader questions will be answered and may appear in this column, when mailed to Gary S. Meyers at 308 W. Erie, Suite 300, Chicago, Ill. 60610