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IS STILL EXCEPTIONALLY HIGH FOR THIS STAGE OF A PRESIDENTIAL TERM. EVERYONE EXPECTS HIM TO ANNOUNCE IN THE AUTUMN, OR JUST POSSIBLY THE EARLY SPRING, THAT HE WILL SEEK A SECOND TERM, WITH QUAYLE ON THE TICKET. THE PARTY MACHINE IS ALREADY GEARING UP FOR THE CAMPAIGN, AND THE COMMERCE SECRETARY, ROBERT MOSBACHER, WILL LEAVE HIS DEPARTMENT BEFORE LONG TO CHAIR EITHER THE CAMPAIGN OR, MORE LIKELY, ITS FUND-RAISING ARM.

6.

THE APPROACH OF THE CAMPAIGN, THE ARRIVAL OF A NEW SPEECH-WRITING DIRECTOR AT THE WHITE HOUSE, AND PERHAPS THE PRESIDENT'S OWN CONFIDENCE IN THE WAKE OF HIS GULF SUCCESS, HAVE CONTRIBUTED TO A NEW PARTISAN EDGE TO HIS RHETORIC, NOTABLY IN A SERIES OF GRADUATION SPEECHES ACROSS THE COUNTRY. THE SIGNS ARE THAT THE PRESIDENT HIMSELF WILL CAMPAIGN ACTIVELY, NOT ONLY FOR HIMSELF BUT ALSO IN THE HOPE OF UNSEATING SOME OF THE 20 DEMOCRATIC SENATORS (COMPARED WITH 14 REPUBLICANS) UP FOR REELECTION NEXT YEAR. FOLLOWING A CHECK-UP ON 24 JUNE, THE PRESIDENT CLAIMED THAT HE WAS QUOTE 100 PER CENT FIT UNQUOTE: APART FROM OCCASIONAL TIREDNESS, THE PRESIDENT'S HEALTH PROBLEMS SEEM TO BE BEHIND HIM, AND ARE CERTAINLY NOT AFFECTING HIS EXTRAORDINARILY ACTIVE

LIFESTYLE.

THE ECONOMY

THE

7. THE KEY FACTOR IN BUSH'S REELECTION WILL BE THE ECONOMY. OUTLOOK IS SOMEWHAT BRIGHTER THAN IT WAS A MONTH OR TWO AGO. THE RECESSION SEEMS TO HAVE BOTTOMED OUT, MAKING THIS ONE OF THE SHORTEST AND LEAST SEVERE OF THE POST-WAR PERIOD. INFLATION STANDS AT 5 PER CENT, BUT IS EXPECTED TO FALL TO JUST OVER 4 PER CENT BY THE TURN OF THE YEAR. AT 6.9 PER CENT, UNEMPLOYMENT (WHICH MAY RISE FURTHER) IS AT ITS HIGHEST FOR ALMOST FIVE YEARS: BUT, PROVIDED RECOVERY IS SUSTAINED, IT SHOULD FALL DURING 1992. ALTHOUGH THERE IS STILL WIDESPREAD UNEASE ABOUT THE ECONOMY, ESPECIALLY IN THE NORTH EAST, THE OUTLOOK FOR 1992 IS FOR STEADY IF NOT DRAMATIC IMPROVEMENT. IN FISCAL YEARS 91 AND 92, THE BUDGET DEFICIT IS LIKELY TO REACH RECORD LEVELS OF ABOUT DOLLARS 300 BN,

OWING PARTLY TO BANK AND THRIFT INSURANCE COSTS. BUT,

BUT, WHEN DEPOSIT INSURANCE AND CYCLICAL EFFECTS ARE REMOVED, THE UNDERLYING DEFICIT

AT ABOUT DOLLARS 100 BN SEEMS TO BE ON A DOWNWARD TREND.

THE DOMESTIC AGENDA

-

8.

DEMOCRATIC CLAIMS THAT THE ADMINISTRATION'S DOMESTIC AGENDA IS THIN OR NON-EXISTENT HAVE MADE ONLY LIMITED HEADWAY. THE

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