Administration Foresees Lagging 1986, Surging ’87

The Reagan Administration, in a preliminary review of the economy at midyear, has trimmed its growth estimate for 1986 but substantially boosted projections for economic activity next year, officials said today.

The Administration’s forecast, which will be revised before being issued, has reduced its projection for growth this year, as measured by the gross national product, to 2.6%, down almost a full percentage point from its February estimate of 3.4% growth.

This revision was expected because the economy from January through June performed far below the Administration’s original forecasts.

For 1987, the Administration is projecting that the economy will come surging back at a robust annual rate of 4.5%.

Although private analysts generally agreed with the Administration’s scaled-down prospects for this year, many dismissed the 1987 outlook as totally unrealistic.

‘It Is Bizarre’

“It is not only inaccurate, it is bizarre,” said Michael Evans, head of a Washington forecasting firm. “The economy doesn’t have a ghost of a chance of getting to the growth number they are forecasting for 1987. The obvious reason they are doing this is to make the budget numbers look better.”

Evans said he is forecasting that the economy in 1987 will grow at a rate of 1.7%. Evans said his projection, which is close to those of many other private analysts, would add around $45 billion to the 1987 budget deficit above the Administration’s figures.

The Administration’s estimates are only preliminary and were made before the government released its new GNP estimate on Tuesday, officials at the Office of Management and Budget said.

One official, who spoke on condition that she not be named, said the new GNP data, which showed the economy growing at a 1.1% rate from April through June, probably will force changes in the estimates before they are formally released in early August.