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

DATE: FRIDAY, August 27, 1993                   TAG: 9308270172
SECTION: BUSINESS                    PAGE: A9   EDITION: METRO 
SOURCE: San Francisco Chronicle
DATELINE:                                 LENGTH: Short

ERROR CAUSES ANALYSTS TO SLASH GROWTH FORECASTS

The discovery of an error in an obscure auto industry newsletter is forcing economists to slash their forecasts of U.S. economic growth by as much as one-third.

Analysts who had expected the economy to zip ahead at an annual rate of nearly 3 percent in the current quarter now think its growth will fall below 2 percent.

The dramatic change in the consensus outlook calls into question the sustainability of the recovery and the adequacy of national economic policies based on illusory projections.

The culprit is a usually well-informed weekly newsletter published in Detroit, Ward's Automotive Reports, which most economists consider a definitive road map to industry trends.

Starting in May and running as late as Aug. 2, Ward's reported robust estimates for U.S. car and truck production. Monday, however, Ward's said in its lead story that General Motors would build about 170,000 fewer cars than expected, dragging down the industry production forecast nearly 7 percent.

Haig Stoddard, managing editor of Ward's, conceded the newsletter may simply have erred. "It's possible there was some miscommunication with our sources and someone mistook North American for U.S. production," he said.

The news exploded like a bomb on the desks of economists across the country.

"Everyone was assuming you'd get a kick from autos, but now it looks like only a nudge," said Donald Fine, chief market analyst at Chase Securities in New York.

by CNB