Survey Finds Risks Growing as Business Slows

The U.S. economy will avoid a recession this year, but the risks are growing as business activity downshifts sharply into a severe slowdown, according to a survey of economists. The National Assn. for Business Economics also forecast a drop in short-term interest rates, a smaller rise in consumer prices and a higher level of unemployment in 2001 compared with 2000. For all of 2001, the NABE said it expects the gross domestic product to slow to 2% from 5% in 2000, the strongest full-year pace in 16 years. The 2% growth rate would be the weakest performance since 1991, when economic output declined by 0.5%. In November, the NABE survey of 34 economic forecasters predicted 2001 growth of 3.4%. The risk of recession this year rose to 33% in February from 20% in November. After-tax corporate profits, which were estimated to have soared 13.7% last year, are expected to eke out a scant gain of only 0.3% this year because of slower growth and continued strong labor costs--a sharp drop from the 5% forecast in November, NABE said.