[clari.biz.finance.services] Bank economists see slow growth but no recession

clarinews@clarinet.com (02/02/90)

	WASHINGTON (UPI) -- Slower economic growth is on the horizon this
year but the threat of a recession is unlikely, a panel of bank
economists said Thursday.
	The Economic Advisory Committee of the American Bankers
Association, concluding a two-day assessment of the nation's economy,
forecast a meager expansion during the first half of the year and
higher, but ``subpar'' growth in the second half.
	The panel of 13 economists projected economic growth of only 1.8
percent this year, well below the 3.3 percent growth forecast by the
Bush administration in its preparations of the fiscal 1991 budget.
	Economic growth is expected to improve to 2.5 percent next year,
the economists said.
	The panel said inflation would remain above 4 percent during the
year, with a temporary rise above 5 percent during in early 1990.
	``This combination of slow growth and stubborn inflation is not
optimal but is liekly to prevail through 1990,'' said Kathleen Cooper,
the committee's chairman and chief economist at Security Pacific
National Bank in Los Angeles.
	Cooper said the bank economists ``strong support'' the Federal
Reserve's policy of progressively lowering inflation ``even though this
may require a level of growth below the economy's long-run trend.''
	The economists said the current uptick in long-term U.S. interest
rates, which was sparked by renewed inflation concerns and higher
Japanese rates, will subside by the end of the first quarter.
	Cooper said the decline in interest rates will be moderate because
of lingering concerns about inflation.
	Also forecast was a U.S. trade deficit of about $110 billion and a
slight weakening of the dollar against the yen.
	The economists encouraed the Federal Reserve to reduce its monetary
growth targets by one-half of a percentage point.