Economists See Fair Strength in ’87 Economy

The U.S. economy will show moderate strength this year with the chances of another recession fading farther into the future, economists for some of the nation’s biggest corporations predicted today.

In its latest survey, the National Assn. of Business Economists said it found economists more optimistic than they were three months ago that the current recovery is gathering momentum after a prolonged period of sluggishness.

The economists predicted that growth this year will be up substantially from the anemic 1986 performance, with the jobless rate dipping slightly and interest rates holding steady at current low levels.

Fewer See ’87 Recession

While a December survey found 32% of the economists surveyed forecasting a recession for 1987, that figure now has dipped to 17%.

“There is much more optimism now. We have had several sources of strength all pointing to higher growth,” said Jerry Jordan, president of the association. “The general feeling is that instead of hovering just on the horizon, the recession has been pushed further into the future.”

Forty percent of the economists picked 1989 as the most likely year for the next downturn, while 34% said it would occur in 1988.

Administration More Hopeful

This outlook is still more pessimistic than that of the Reagan Administration, which predicts the recovery from the 1981-82 recession will continue uninterrupted through 1992.

Jordan, chief economist for First Interstate Bancorp of Los Angeles, said the most likely causes cited for the next recession are increasing inflation and rising interest rates. Other possible recession triggers are a cutback in consumer spending and continued declines in the value of the dollar on world currency markets.

For 1987, the economists predicted that the economy will grow 2.8% when measured by the gross national product from the fourth quarter of 1986. The GNP grew just 2.1% in 1986, and the Reagan Administration is forecasting growth this year of 3.2%.