Economists Panel Sees No Recession, Slower Growth

A group of business economists said today they believe the U.S. economy will escape recession this year, but that growth will be slower than the White House predicts.

The National Assn. of Business Economists said its panel of 65 professional forecasters sees the economy expanding by 1.7% this year, contrasted with a 2.6% growth rate in the gross national product predicted by the Bush Administration.

The panel’s forecast, if it comes near the mark, could mean bad news for Administration efforts to reduce the budget deficit without raising taxes, the economists said.

The NABE economists said they see the budget deficit at about $140 billion for 1990 and $120 billion in 1991, far above the White House’s projections of $124 billion in 1990 and $63 billion in 1991.

They said inflation will show some improvement in 1990, but not enough to cause Federal Reserve policy-makers to cheer. They see consumer prices rising about 4% in both 1990 and 1991.

“Only if the minority of forecasters who project a recession are correct, is a sharp improvement in inflation probable,” the NABE said.

While only a minority of forecasters see a recession this year, most said they do not think all danger of recession has passed. Almost 80% of the forecasters said they think the chance of a recession has risen or remained the same over the last quarter, when GNP grew an anemic 0.5%.

Only small gains will be made in reducing the size of the U.S. trade deficit this year, the NABE forecasters said. They see the trade deficit, which was $108.6 billion in 1989, falling to $105 billion in 1990 and $99 billion in 1991.