The nation's top business leaders Friday predicted that economic growth this year will taper off from an already slackening pace, but they nonetheless radiated confidence that a recession can be avoided.
In its semiannual forecast, the Business Council predicted that growth, as measured by the gross national product, will fall to 2.9 percent this year and to 1.7 percent in 1990.Although that would represent a significant slowdown from the healthy 3.9 percent pace posted last year, the council expressed "general optimism" that no economic downturn is likely in the next two years.
Indeed, the council's consensus report forecasts that growth will rebound in the latter part of 1990, rising from 1.4 percent in the first quarter to 3.1 percent by the fourth quarter.
"This suggests not only that recession will be avoided but that the economy could be headed in 1991 toward an unprecedented ninth year of peacetime cyclical expansion," the report said.
The council, made up of executives of 65 of the nation's largest corporations, said the anticipated slower-growth trend for the near future comes largely from an expectation that exports and business investment will contribute less to the economy this year than in 1988.
The panel's economists also expressed concern about worsening inflation extending into 1990, with some corporate analysts expecting price increases to advance at an annual pace exceeding 6 percent.
Inflation worries have heightened this year as several sharp monthly advances in the Consumer Price Index combined to pace a 6.1 percent annual inflation rate during the first quarter.
The council's consensus call is for a 5 percent rise in consumer prices in both 1989 and 1990, up from 4.4 percent in the past two years.
"The central view is that although the flare-up of prices early in 1989 was an aberration, price behavior overall will not improve appreciably until mid-1990," the report cautioned.
It said future price increases would be held down somewhat by a falloff in oil prices, which were a big part of the first-quarter surge in inflation.