Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, July 18, 1990                   TAG: 9007180463
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A/5   EDITION: EVENING 
SOURCE: BILL HENDRICK COX NEWS SERVICE
DATELINE: ATLANTA                                LENGTH: Medium

ONE ANALYST THINKS RECESSION STARTED BACK IN JANUARY

The chairman of the respected Sindlinger & Co. of Wallingford, Pa., said he expects the government to officially acknowledge the slump next week, when it revises economic growth estimates for the first quarter and releases new data for the second quarter.

"The odds are 7-to-3 they will report two negative quarters [of GNP growth], which makes January the start of recession," said Sindlinger, who has been polling households for 35 years about their economic well-being, and who claims to have predicted all six recessions since then.

The government, which defines a recession as two consecutive quarters of shrinking GNP, or gross national product, previously estimated growth at 1.9 percent in the first quarter. Most private economists think the economy slowed to an annual growth rate of 1.5 percent or less in the April through June period.

Sindlinger commented after The New York Times said in a front page story that, by its reckoning, 16 state economies are in or near recession, but that the U.S. economy - though in trouble - is continuing to grow weakly. Sindlinger said the newspaper's conclusions were flawed because they were based on employment data, which he believes from his long experience is unreliable.

"This is not an unemployment recession, but a recession among the employed," said Sindlinger, who bases his assessments on questions about income his company asks of about 800 people weekly. "There is a credit squeeze at the business level, and a money squeeze at the household level. You have deflation in real estate and inflation in living costs."

According to Sindlinger, more consumers are reporting every week that their "incomes are being squeezed." Fixed costs - insurance, "local tax increases, sales tax increases, school tax increases and the like" - are rising, while real estate values are declining, he said.

Although increasing numbers of economists are lowering their 1990 estimates for economic growth, most, such as Roger Brinner of DRI/McGraw-Hill in Lexington, Mass., still believe a recession will be avoided this year.

"A lot of people are worried that we may fall into recession, and I'm concerned," Brinner said. "I think we have one chance in four of falling into one this year, but we haven't yet, and I don't believe we will unless somebody [like Sindlinger] scares people.

"If consumers and businesses get scared, we could have a self-fulfilling prophecy," he said. "It is really dangerous, particularly when the economy is in a precarious balance, to have somebody take an emotion-laden word and say `28 states are in recession' and then force people to read the fine print."

Sindlinger's judgments are based on answers to a series of questions his employees ask consumers about their personal net worth.

Brinner conceded the validity of Sindlinger's conclusion that people are feeling more and more pinched. However, Brinner added, "what Sindlinger really means is that people have less money than they would like to spend."