As it turned out, the mild economic stimulus ordered by President Bush last year gave the summer months a kick. Consumer confidence surged in November-an echo vote for the president-elect. Then spending got a push from rising incomes (for those with jobs) and reduced installment debt. Historically speaking, business is still limping. In the first 18 months of the recovery the economy grew by a total of 2.9 percent, compared with 10 percent in earlier upturns. But at least the patient is off crutches. Third-quarter growth stood at 3.4 percent, more than twice the second-quarter rate.

Will the pickup continue in 1993? Yes, says economist Edward Hyman of the International Strategy and Investment Group, and should boost the value of your investments. Hyman sees lower interest rates and inflation ahead; those who disagree see rate rising only a little bit. Job growth remains microscopic, but “more temporary employment is opening up,” says Irwin Kellner, chief economist of the Chemical Banking Corp. “These jobs can be 9 to 5, five days a week.”

That’s about as encouraging as the optimists get. The pessimists aren’t convinced that even this slow rate of growth will last.

Most investments did OK in 1992 (chart)-not great, but at least beating out the 3 percent inflation rate. Investors in Europe and Japan got creamed, but funds focused on Southeast Asia rose. Here’s the outlook for making money in ‘93:

At only 3.4 percent, one-year CDs bought today will get you nowhere in ‘93. Instead, use Series EE savings bonds. You earn 4.25 percent on bonds cashed in after one year and a guaranteed 6 percent or more annually if you hold for at least five years.

High-yield (junk) bond mutual funds rode the high wire in ‘92, for the second year in a row. In a rising economy, they should continue to outperform, says Minneapolis investment adviser Steve Leuthold. If you prefer higher-quality bonds, go for Ginnie Mae funds; they own Treasuries and government-backed mortgages and pay new investors around 7 percent currently. Tax-exempt funds are in the 6 percent range. Keith Brodkin, chairman of the MFS mutual-fund group, doesn’t see much chance of gain or loss in bonds this year. “They will do what they’re designed to do-throw off current income,” he says.

Prices of homes rose the fastest in the Middle West, with more of the same predicted for 1993. At the median, houses there cost $82,500, a tremendous bargain for people moving from the coasts. Except perhaps in California, prices in the weaker states have probably seen bottom. Many commercial properties are also on the mend. One way to share in the slow but sure recovery of good real estate: buy shares in real-estate investment trusts (REITs). A REIT owns a portfolio of properties, trades like a stock and is bought through stockbrokers.

A slow-growth economy can support stocks, although strategists worry that current prices have run too high. Market-timer Norman Fosback, editor of the Mutual Fund Forecaster in Ft. Lauderdale, Fla., says he’s half in stocks (to catch any rise) and half in cash (for buying more, if prices drop). Steady, monthly investors will get an acceptable average of high and low prices over the year. Fosback’s “best buys” in mutual funds, ranked from the most to the least volatile: Twentieth Century Ultra, Janus Twenty, Kaufmann, Janus and Fidelity Low-Priced Stock.

Small stocks have run circles around the big boys since the autumn of 1990-and once started, these cycles usually last for four to five years. They’re often punctuated by downdrafts, like the four-month drop last spring. Even so, T. Rowe Price’s benchmark New Horizons Fund rose by 91.6 percent over the past two years, compared with 51.7 percent for Standard & Poor’s 500-stock index.

European stocks should rise this year, assuming that Germany finally lowers its interest rates. But the dollar is rising against Europe’s currencies, so investments there will be worth less in dollar terms. That makes U.S. stocks a better deal, says William Holzer, who runs the Scudder Global Fund. Asia could be a different story. Kellner thinks the dollar will decline against Asian currencies, raising the value of Asian stocks. Furthermore, Southeast Asia could be the decade’s fastest-growing region. Among Asian funds, the analysts at Morningstar pick Newport Tiger, which carries a 5 percent sales charge, and the no-charge T. Rowe Price New Asia Fund.

As usual, the prudent investor should sample a little of everything. That way, you’re sure to have a piece of whichever investments decide to go up.

You know it was a ho-hum year if CDs can rival growth stocks. In 1992, junk bonds led the pack.

INVESTMENT 1992 RETURN One-year CD 4.2% Single-family homes* Northeast -0.4% Midwest 5.6% South 4.9% West -0.6% Mutual funds+ High-yield bond 15.5% Small-company stock 9.4% Municipal bond 7.3% Growth stock 6.0% Ginnie Mae 5.0% Foreign stock -6.1% *12 MONTHS ENDING NOVEMBER, +DIVIDENDS REINVESTED. SOURCES: BANK RATE MONITOR, NATIONAL ASSN. OF REALTORS, MORNINGSTAR

PHOTO: Jane Bryant Quinn

Subject Terms: INVESTMENTS