Business Leaders Do a Turnabout, Predict Growth

The nation’s top business leaders, who just six months ago warned that a recession was a distinct threat, said today that the economy will continue to grow moderately at least through 1991.

The Business Council--100 chief executives of the country’s largest corporations--forecast that the economy will grow at a 2% pace in 1990 and 2.6% in 1991. Last October, it had projected growth of only 1.8% for this year, the slowest pace since the recession year of 1981.

“There is remarkable unanimity among our consultants” who drew up the forecast, said Lewis T. Preston, chairman of J. P. Morgan Inc. and council vice chairman. “Not a single one of the 19 is forecasting a recession to begin any time this year or next.”

“The dominant belief is that the (Federal Reserve) has successfully guided the economy into a moderate growth pattern that has an excellent chance of being extended for a very long time,” Preston said in presenting the forecast on the eve of the council’s semiannual meeting at the Homestead resort.

Despite continuing high interest rates, the council increased its inflation forecast to 4.8% from 4.2% for this year because of weather factors and other “aberrations” that pushed prices up 8.1% at an annual rate during the first quarter.

But the council said inflation will drop to 3.9% during the second half of the year and average 4.4% during 1991. Consumer prices were up 4.6% in 1989.