US ECONOMIC RECOVERY COMING, BOSKIN SAYS
White House chief economic adviser Michael Boskin said yesterday that the US economic recovery has not started yet but that certain precursors have been seen that precede a recovery by two to five months. Mr. Boskin, in a television interview, said the recovery should begin in the next few months. ``First we will see the economy stabilize, stop contracting.... We'll see some mixed signals for a few months. Then in the second half of the year we will probably see the economy growing in the 2 to 3 percent range at an annual rate.''
Boskin said there are several precursors of a recovery present, including lower interest rates, a growth in the money supply, lean inventories, and rebounding consumer confidence.
``All of these are good signs and generally precede a turnaround by a period of from 2 to 4 to 5 months, usually. I must emphasize that the recovery has not started yet. These are preconditions,'' he said.
Boskin said the Federal Reserve Board has begun to ease monetary policy more aggressively, but said there was room for interest rates to fall.
``We do believe there is ample room, as conditions warrant, for rates to fall further.'' He said this should be true unless inflation, which seems quiet now, is worse or if the recovery is faster than expected.
Economist Henry Kaufman, formerly managing director of Salomon Brothers, said on the same interview that he agreed the economy would bottom out and begin to recover in the second half of 1991. But he sees a slower recovery rather than the usual 5 to 5.6 percent of economic growth that takes place in the early stages of a recovery.
Mr. Kaufman said the federal budget deficit precluded Washington's ability to use fiscal policy to push the economy out of recession.