Share this story
Close X
Switch to Desktop Site


The United States economy is expected to slow down next year but does not appear headed for recession, economists say.

''A 'soft landing' but no recession is still the best bet,'' says Robert Eggert. He conducts a monthly survey of 50 business forecasters for Blue Chip Economic Indicators, a Sedona, Ariz.-based newsletter. The December survey was released yesterday.

About these ads

''Soft landing'' refers to slowing the economy without braking it into a recessionary nose dive -- the goal of the Federal Reserve in boosting interest rates six times so far this year.

The central bank hopes to keep inflation under control by slowing economic growth to about 2.5 percent annually. The gross domestic product (GDP), the broadest measure of economic activity, was growing at a brisk 3.9 percent annual rate during the July-September quarter.

Alan Greenspan, chairman of the Federal Reserve, told Congress last week that although prices at the consumer level remain well-behaved, inflationary pressures are beginning to show up in the cost of some raw materials.

Many analysts interpret his remarks as meaning that the Fed might nudge rates even higher at policy meetings Dec. 20 or in January.

But the Blue Chip economists, who represent banks, businesses, forecasting services, universities, and Wall Street firms, see little inflation ahead. Of the 53 surveyed this month, the majority call for year-over-year inflation of 2.7 percent in 1994 and 3.4 percent in 1995. Consumer prices rose 2.7 percent last year, the smallest gain since a 1.1 percent increase in 1986.

That prediction comes despite a consensus forecast for economic growth of 3.9 percent this year, the survey's highest projection so far this year and up from 3.8 percent in the November poll.

''More than 80 percent of the 53 economists raised their 1994 real GDP forecast,'' Mr. Eggert says. Real GDP is the total output of goods and services within the US, adjusted for inflation.

About these ads

''Many cited the government's upward revision to the third-quarter growth rate, the continued sharp gains in employment, and the November rise in disposable personal income,'' he says.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.