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

DATE: FRIDAY, June 11, 1993                   TAG: 9306110114
SECTION: BUSINESS                    PAGE: B9   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

BLUE CHIP FORECASTERS SEE GROWTH DETERRENT IN TAXES

Some of the nation's top economists think President Clinton's proposed tax increases will curb economic growth this year, according to a survey released Thursday.

The consensus of the 51 economists surveyed this month by the Blue Chip Economic Indicators newsletter forecast growth of just 2.7 percent, down from 3 percent in an early May outlook.

Robert J. Eggert Sr., editor of the Sedona, Ariz., publication, said it was the second straight 0.3 percentage point drop - "one of the sharpest two-month downward adjustments in our 17-year history."

"Many of the 45 panel members who lowered their GDP [gross domestic product] forecasts from last month cited the potential effects of retroactive tax increases on fourth-quarter growth if the Clinton administration's budget plan is adopted," Eggert wrote.

"Worsening trade figures and the recent Labor Department study that projects an additional 1.9 million defense-related jobs will be lost by 1997, more than double that of the last four years" also were cited, Eggert wrote.

Eggert said the survey was conducted just before Friday, when the Labor Department reported the unemployment rate down to 6.9 percent in May after sticking at 7 percent the previous three months. The report also showed that payrolls grew by more than 200,000 for the second straight month.

Had the survey been taken after the report, Eggert said, the consensus on growth "might have been a shade higher," But he added, "There's an awful lot of nervousness about the tax increase.

Eggert said the consensus forecast for 1994 economic growth remained at 3 percent for a second month in a row.

"However, more than twice as many of our panel members lowered their forecasts as compared to those who raised them," he added.

The consensus forecast for inflation as measured by the Consumer Price Index was unchanged from a month ago at 3.2 percent this year and 3.3 percent in 1994.

The survey participants represent banks, businesses, economic forecasting services, universities and Wall Street firms.

by CNB