Economists See Recession Looming in ’87

The United States should enjoy slightly better economic growth next year but a recession looms as a growing possibility in 1987 with a great likelihood that the downturn will either be triggered or made worse by the new balanced-budget law, the nation’s business economists said today.

The National Assn. of Business Economists said its latest poll of 300 of its members found that an overwhelming 85% believe that the country will be in a recession by the end of 1987.

Only 15% of those polled believe that the current recovery, which is now entering its fourth year, will survive into 1988 or beyond.

The economists also expressed little confidence in the Gramm-Rudman bill Congress passed last week requiring a balanced budget by 1991.

Oppose Automatic Cuts

A substantial majority, 59%, said they do not believe the balanced budget bill is an effective way to reduce soaring federal budget deficits. They objected in part to the automatic nature of the cuts.

The problem, as the economists see it, is that federal budget cuts will reduce the stimulus needed to drive the economy forward and that the alternative, raising taxes, also would retard economic growth.

“There is no question that our members think that 1987 is the most likely year for a recession,” said Kathleen Cooper, president of the association. “If we start to cut spending or raise taxes during 1986, it is going to make 1987 an even rougher year.”