For many of us, this holiday season is the most special time of the year -- a time when faith, joy, and love lift our spirits and bring new meaning to our lives. It's a time when we can look into the heart of America and know that her heart is good. And this year, especially this year, it's a time when we can look to our future with new hope -- 1983 will be a better year.

Together, we've launched a great national effort to correct the dangerous, neglected problems that were leading our country toward disaster. The job hasn't been easy; it's been a long, tough haul. And let's not kid ourselves, we have much more to do before we can truly say America is well again.

For too many of us, economic recovery is still a faceless stranger in some cold, distant future, not a warm friend who's come to grace our family hearth. But despite our frustrations, let's not lose sight of the essential: America is on the mend. To move forward again we had to get rid of what was holding us back -- runaway spending, double-digit inflation, record interest rates, a tax burden soaring out of sight, and an alarming erosion of our national defense, which jeopardized our security and undermined our leadership abroad. Progress is always slower than we'd like, but there's no doubt we're making headway on each of these deep-rooted problems.

Looking to the future, I see an America that will help to lead the world out of its longest, deepest recession in postwar history; 1983 will witness a higher level of economic activity and lower unemployment. This view is held not only by my economic advisers but by the vast majority of private forecasters across the country, and the forecasts are being borne out by the facts and figures. Momentum for recovery is not weakening but building. Sharp declines in inflation, interest rates, and the first reductions in personal income tax rates have given consumers more money to spend, more incentives to save, and more confidence to do both. Workers' real hourly earnings have registered their first year-to-year improvement since 1978.

One of the most encouraging signs we're seeing is the strong recovery in a bedrock American industry -- housing. More homes built will mean new demand for big-ticket items like appliances, whose sales have been lagging. Auto and retail sales are also picking up, and business startups are near a record. All this will stimulate demand for labor, and that means jobs. I think it's encouraging that the help wanted advertising index in October -- the most recent month available -- rose 4.1 percent after falling for the previous 10 months. Equally encouraging, initial claims for unemployment insurance have begun to trend lower.

Now, let me say a word about another long-ignored problem we've begun to correct -- the decline of our nation's defenses. The day I took office, almost 2 years ago, our Armed Forces were in a dismal state of readiness. Shortages of skilled manpower, faulty equipment, lack of spare parts, insufficient fuel and ammunition for proper training -- all had left the United States exposed and vulnerable.

Let us always remember we have no higher responsibility than safeguarding the security and freedom of our country.

One of my first priorities was to restore the readiness of our Armed Forces. We've begun to pay our soldiers a decent wage for the risks they take, and that incentive is bearing fruit. Reenlistment is up significantly, and the educational caliber of enlistees is improving, too.

But we're not just giving our men and women in uniform the better pay they deserve, we're also providing them the training and equipment they weren't getting before. We have increased pilot flying time, extended basic training, and restocked spare parts inventories.

By providing adequate compensation for our soldiers, by giving them the tools they need to do their jobs, we're restoring dignity, honor, and pride to the uniform of the United States of America. And, by strengthening the credibility of our Armed Forces, we increase the probability of reaching a satisfactory arms control agreement with the Soviet Union.

A stronger defense is an investment in peace. It helps ensure that our sons and daughters will not have to pay the price that so many before them had to.

Two years ago, there was growing doubt about America's determination to protect its vital interests and fulfill its obligations as a trustee of freedom, democracy, and peace. Well, I don't think anyone harbors such illusions anymore. With our friends in the Americas, Europe, Africa, and Asia, we're working in a spirit of partnership to stimulate economic progress and to build a more peaceful world.

The United States will redouble its efforts to restore sovereignty to Lebanon and to renew negotiations for an end to turnoil and bloodshed in the Middle East. And we'll strive to strengthen world peace through intensive negotiations with the Soviet Union. I want the Russian people to know the United States is committed to negotiate significant reductions in existing levels of weapons and to foster a more stable relationship between our two nations.

In this season when people all over the world celebrate the birth of Jesus, the one we call the Prince of Peace, let us rededicate ourselves to this sacred mission.

Our country may face enormous challenges, but the great advantage of our democracy is that we do not act from fear or simply respond to threats. We Americans have never been pessimists. We conquer fear with faith, and we overwhelm threats and hardship with courage, work, opportunity, and freedom.

We're a nation built and sustained by hope. And for all of us in America, this is a time for new hope.

Till next week, thanks for listening, and God bless you.

Note: The President spoke at 12:06 p.m. from the Oval Office at the White House.