Economists Say US Recession Is Ending
A GROUP of professional economic forecasters said in a survey released yesterday that the recession is drawing to a close, but that the recovery will be slower than usual and will be accompanied by modest increases in inflation. Two-thirds of the respondents to the quarterly survey by the National Association of Business Economists said the recession should end during the second quarter of the year. Nearly one-third put the bottom of the downturn in the third quarter.
The most helpful stimulants to the economy were the Federal Reserve Board's decisions this winter and spring to ease monetary policy, the 58 economists said. Those moves eventually translate into lower interest rates for consumers, making it easier for them to borrow and spend.
The economists expect the recovery to receive a boost from a rebound in consumer confidence and from the completion of the process by which businesses liquidate their inventories, clearing space for new production, the survey said.
But the vast majority of respondents said they expect the upturn to be slower than the average postwar recovery. They attribute this to monetary policy, tight lending by banks, the extent of the inventory cycle, and the slow pace of overseas growth. Their estimates for key economic indicators include:
Inflation. Respondents expect inflation to increasing by 3.5 percent this year and 4 percent in 1992, after rising by 6.3 percent in 1990.
Gross national product. The nation's total output of goods and services is expected to slip by 0.4 percent on a year-to-year basis over 1990, double the loss predicted in the last quarterly survey. Less consumer spending and business investment are cited as reasons.
Interest rates. The economists said that they expected interest rates to ``drift upward'' during the next year-and-a-half, stabilizing at between 8 percent and 8.2 percent.