Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 27, 1991 TAG: 9102270040
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The National Association of Business Economists survey showed Tuesday that 49 of the 54 forecasters participating in the poll, or 91 percent, think the recession will last nine months or less - meaning it should be over by mid-year.
The eight previous recessions since 1945 have averaged 11 months in length during which the economy fell an average 2.5 percent. The consensus of the NABE forecasters project the drop in the GNP this time to be just 1 percent. The poll was conducted in the first two weeks of February.
"Compared to historic norms, that is a fairly short recession," Richard D. Rippe, NABE president and chief economist for Dean Witter Reynolds in New York, told a news conference. "In terms of severity, the recession is expected to be fairly shallow compared to historic norms."
A recession generally is defined as at least two consecutive quarterly declines in the gross national product - the nation's total output of goods and services. The Commerce Department said the GNP fell at an annual rate of 2.1 percent in the fourth quarter of 1990.
President Bush based his fiscal 1991 budget on assumptions that the recession would be mild and last just two quarters, with economic growth resuming in the April-June period. The NABE forecasters were slightly less optimistic, projecting a tiny contraction in that quarter but moderate growth thereafter.
In other economic news Tuesday:
Orders to U.S. factories for durable goods declined 0.7 percent in January after advancing 2.7 percent a month earlier, the Commerce Department reported. The pace of orders for items expected to last more than three years has bounced up and down for more than a year.
The U.S. merchandise trade deficit narrowed 5.4 percent to $108.68 billion in 1990, the smallest gap in seven years, Commerce said. Both exports and imports set records, although the import growth was slower than exports.
The NABE forecast projected the economy will decline 0.2 percent in 1991 on a year-over-year basis. That includes contractions of 1.6 percent in the current quarter and 0.3 percent from April through June before posting moderate growth rates of 1.9 percent in the third quarter and 2.5 percent in the fourth.
That forecast said the economy will advance 2.5 percent in 1992 while the Bush forecast calls for 3 percent growth each year from 1992 through 1996.
The NABE forecast projected an unemployment rate of 6.6 percent this year, dropping to 6.2 percent in 1992. The jobless rate was 5.5 percent in 1990.
The forecast also projected a 3.8 percent decline in after-tax corporate earnings after edging up just 0.1 percent in 1990. And, Rippe said, it called for "weak results in such cyclical sensitive sectors such as housing, automobiles and industrial production."
On the other hand, Rippe noted "a few bright spots:"
Inflation as measured by the Consumer Price Index is expected to slow to 4.6 percent this year on a year-over-year basis and to 4 percent in 1992. The CPI rose 6.1 percent during 1990.
Interest rates for both short-term Treasury bills and long-term Treasury bonds will decline slightly between now and the end of June, but then rise throughout the balance of 1991 and during 1992, the forecast said.
And the trade deficit will drop to $95 billion this year from $101.1 billion in 1990, according to the outlook.
But the federal budget gap will jump to $300 billion this fiscal year, up from $220.4 billion in fiscal 1990, before falling to $291 billion in the fiscal year starting next October, the forecasters said.
by CNB