In a forecast certain to raise alarms at the White House, the nation's top business leaders said Saturday the current economic hard times will be followed by an extended period of lean times.
The Business Council, 100 executives from the country's largest companies, said the nation's first recession in eight years should be over at least by the end of the year, but they appealed for lower interest rates to make that forecast more certain.Federal Reserve Chairman Alan Greenspan, who was briefed on the executives' rather pessimistic outlook, gave no indication whether he would heed their call for lower rates, according to participants in Saturday's closed-door meeting.
"He was his usual inscrutable self," said American Express chairman James D. Robinson III. "But I think he listened carefully to what the business group was saying about the state of their own business affairs, which is not very optimistic."
While Greenspan didn't tip his hand, many of the executives said they expected further rate cuts if the economy fails to show signs of a rebound.
The Business Council forecast, prepared by 20 corporate economists, was far gloomier than the Bush administration's forecast.
The administration projects an end to the recession during the April-June quarter, with the economy rebounding quickly to fairly robust growth rates.
In their assessment, the corporate leaders warned that business activity coming out of the slump will be far below the pace of a normal recovery period. They said the huge buildup of government, business and consumer debt during the 1980s would act to depress activity for some time.
The council predicted economic growth in the first 12 months of recovery would be less than half the 6.75 percent normal average for the period right after a recession ends.
That would mean sub-par growth rates at least through 1992, a period when President Bush had hoped for robust activity to push the unemployment rate down and keep the economy from becoming an issue in the presidential campaign.
While 16 of the council's 20 economists said they expected the recession to be over by June, some business leaders said the upturn could well be later, with the most downbeat saying a slump could last into next year.
"Economists don't have any responsibility," said Robert E. Allen, chairman of AT&T. "Those of us who have to go on the line tend to be a little more cautious."
And John F. Welch Jr., chief executive of General Electric and the president of the Business Council, said "the economy is weak and where it goes from here is questionable."