An overwhelming majority of economists surveyed in a recent poll believe the United States will fall into a recession within the next two years, but a growing number think it will happen later rather than sooner.
In its quarterly survey, the National Association of Business Economists said Monday that 89 percent of the respondents predicted a U.S. recession in 1989 or in 1990.The poll was conducted in late August and early September among a panel of 60 members of the group, which represents 3,500 corporate, government and consulting economists.
While there was a strong consensus that a recession would occur over the next two years, the survey found that the percentage of economists who believe it will occur next year fell to 47 from 57 in the group's previous poll in May.
But the proportion predicting a recession in 1990 rose to 42 percent from nearly 32 percent last May, the survey said. Another 11 percent believe a recession can be avoided until later, compared with less than 6 percent who thought so in May.
A recession is generally defined by economists as at least six consecutive months of decline in the nation's total output of goods and services, or gross national product.
A consensus of those polled predicted that economic growth for the year ended the fourth quarter of 1989 would slow to a meager 2.0 percent from the expected 3.1 percent a year earlier and the actual 5.0 percent in the year before that.
The survey also predicted a modest acceleration of inflation next year, with a consensus expecting about a 5 percent increase in the Labor Department's consumer price index next year. The index has risen at a 4.6 percent annual rate so far this year after a 4.4 percent rise in 1987.
Interest rates are overwhelmingly projected to continue rising by about one full percentage point before peaking in the first half of next year, the survey said.
The U.S. merchandise trade deficit is expected to fall to $135 billion this year and $120 billion in 1989 from its record $170 billion last year, it said.
The dollar is expected to remain around its current levels this year, before resuming its 1985-87 downtrend next year, it said. The higher level of U.S. interest rates was the reason most often cited for the dollar's summer rebound, followed by an improving trade deficit and a still strong U.S. economic growth rate.
Concerning the U.S. presidential elections, 61 percent said Vice President George Bush "would be better for maintaining stable growth and moderate inflation in the years ahead."
Only 22 percent said Democratic presidential candidate Michael Dukakis would be better for growth and inflation, while 17 percent found no difference between the two.
While the economists said cutting the U.S. budget deficit should be the government's No. 1 economic policy priority, a 3-to-1 margin predicted there would be no major deficit-cutting package next year and a consensus said the budget gap would remain around its current $150 billion level.