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BUSINESS ECONOMISTS PREDICT U.S. WILL AVOID A RECESSION THROUGH 1991

SHARE BUSINESS ECONOMISTS PREDICT U.S. WILL AVOID A RECESSION THROUGH 1991

The vast majority of business economists believe the United States will avoid a recession through 1991, making the current expansion the longest since World War II, an influential group of private forecasters reports.

In a quarterly report, the National Association of Business Economists also said the price-rise spurt in the first quarter apparently was spent, with substantial moderation forecast for the remainder of the year."The economy seems to have escaped the recession danger zone raised last quarter," the association said.

While the inflation threat continues to retreat, growth is likely to be moderate at best this year and slower than last year, the association said.

The group's forecast is watched closely by government policymakers because the economists work for many of the major corporations whose plans can directly affect economic activity.

The association predicted that the economy would grow 2.1 percent this year after inflation and 2.5 percent in 1991. The economy grew 2.6 percent in 1989.

The projected slowdown reflects weaker increases in consumption and business spending on plant and equipment. In addition, the economists noted, there has been relatively little improvement in the nation's trade deficit, which impedes growth.

Inflation, while forecast to ease for the remainder of this year, will still be worse than last year but will continue to ease next year, the association said.

Not surprisingly, the economists take a bleak view of the federal budget deficit, which is the subject of talks between the Bush administration and Congress.

The economists estimate that the deficit will hit $154 billion in the current fiscal year and $135 billion in fiscal 1991, which begins Oct. 1.

The White House has called a bipartisan budget summit because of growing evidence that budget-balancing targets mandated by law will not be met unless action is taken.

The economists' forecast projected that interest rates will remain at or near their current levels through the end of the year and decline slightly next year.

The administration, which has been concerned that the economy could stumble into a recession, has been publicly pressing the Federal Reserve to bring interest rates down.

That would stimulate business activity, but the Fed has been worried that lower rates could be inflationary.

The longest cyclical upturn in the postwar years took place between 1961 and 1969 and was 106 months long. If no recession takes place before year-end 1991, as the association predicts, the current expansion would reach 109 months.