Administration Lowers ’87 Economic Growth Forecast : Goes From 4.2% to 3.5%; Jobless Rate Steady at 7%

The Reagan Administration is lowering its forecast for economic growth in the coming year from 4.2% to a less optimistic 3.5%, officials said today.

Meanwhile, any chance of unemployment dipping below 7% this year faded today as the government announced that joblessness remained stuck at that level in November for the third month in a row.

The downward revision in the economic growth forecast came as work continues on a proposed $1.02-trillion budget for fiscal 1988, Administration sources said.

However, the three officers who must sign off on the economic figures that will be plugged into the budget--Treasury Secretary James A. Baker III, Budget Director James C. Miller III and Beryl W. Sprinkel, chairman of the Council of Economic Advisers--have yet to reach agreement on this figure, the sources said.

Bears on Deficit

Changes in economic conditions have an important bearing on the budget deficit. Lower growth implies lower receipts, increasing the budget shortfall.

The Administration has vowed to present a budget to Congress that will meet the $108-billion deficit target of the Gramm-Rudman budget-balancing law for the 1988 fiscal year, which begins next Oct. 1.

The Labor Department, in reporting the stagnant 7% jobless rate, said that the economy created 131,000 jobs last month but that the pool of people competing for those jobs grew by 172,000.

As 1986 began, with unemployment steady at 6.7% from November, 1985, through January, Reagan Administration officials had predicted joblessness for the year would average 6.8%, compared with 7.2% for 1985.

But the rate has dropped below 7% in only three months: January, July and August.

Labor Force Rising

A stagnant labor force, which had kept the jobless rolls down over the summer, began rising again in October. That trend continued in November.

The number of unemployed Americans rose by 41,000 to 8,283,000.

A separate business payroll survey indicated larger employment growth last month, 250,000, almost all of it in the service sectors.

Job growth in services has accounted for all of the 2.4-million job expansion over the last 12 months.

Today’s report said that retail trade employment, “which usually expands in November due to pre-Christmas hiring, grew at a somewhat slower pace than is typical.”

Figures from the payroll survey showed that employment in general merchandise stores rose by 103,000 to 2.49 million in November. After seasonal adjustments, however, such employment was recorded as having fallen by 35,000 jobs.