As you recall, the year 1975 opened with rancor and with bitterness.  Political misdeeds of the past had neither been forgotten nor forgiven.  The longest, most divisive war in our history was winding toward an unhappy conclusion.  Many feared that the end of that foreign war of men and machines meant the beginning of a domestic war of recrimination and reprisal.  Friends and adversaries abroad were asking whether America had lost its nerve.  Finally, our economy was ravaged by inflation—­inflation that was plunging us into the worst recession in four decades.  At the same time, Americans became increasingly alienated from big institutions.  They were steadily losing confidence, not just in big government but in big business, big labor, and big education, among others.  Ours was a troubled land.

And so, 1975 was a year of hard decisions, difficult compromises, and a new realism that taught us something important about America.  It brought back a needed measure of common sense, steadfastness, and self-discipline.

Americans did not panic or demand instant but useless cures.  In all sectors, people met their difficult problems with the restraint and with responsibility worthy of their great heritage.

Add up the separate pieces of progress in 1975, subtract the setbacks, and the sum total shows that we are not only headed in a new direction, a direction which I proposed 12 months ago, but it turned out to be the right direction.

It is the right direction because it follows the truly revolutionary American concept of 1776, which holds that in a free society the making of public policy and successful problem-solving involves much more than government.  It involves a full partnership among all branches and all levels of government, private institutions, and individual citizens.

Common sense tells me to stick to that steady course.

Take the state of our economy.  Last January, most things were rapidly getting worse.  This January, most things are slowly but surely getting better.

The worst recession since World War II turned around in April.  The best cost-of-living news of the past year is that double-digit inflation of 12 percent or higher was cut almost in half.  The worst—­unemployment remains far too high.

Today, nearly 1,700,000 more Americans are working than at the bottom of the recession.  At year’s end, people were again being hired much faster than they were being laid off.

Yet, let’s be honest.  Many Americans have not yet felt these changes in their daily lives.  They still see prices going up far too fast, and they still know the fear of unemployment.

We are also a growing nation.  We need more and more jobs every year.  Today’s economy has produced over 85 million jobs for Americans, but we need a lot more jobs, especially for the young.

My first objective is to have sound economic growth without inflation.