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Economists See Growth Through Late 1988; Interest Rates Higher

October 6, 1987

Undated (AP) _ Rising inflation and interest rates will hurt the nation’s economic growth, but any recession should not come before 1989, the nation’s leading business economists are predicting.

The Washington-based National Association of Business Economists on Monday released a survey that indicated 56 percent of those questioned believed 1989 was the most likely year for a recession.

Interest rates, seen as a key in causing any recession, rose on Monday in the bond market, helping to quiet activity in the stock market.

Rates on the key 30-year Treasury bond rose to about 9.79 percent from 9.68 percent late Friday. Analysts said concerns about inflation and the market’s ability to absorb a planned wave of new Treasury issues helped push rates higher.

On Wall Street, the Dow Jones average of 30 industrials fell 0.81 points to 2,640.18, and most stocks in the broader market moved lower. The blue-chip average rose 70.82 points last week.

The economists’ association also predicted that the overall economy, as measured by the gross national product, would expand 3 percent this year and 2.7 percent next year. Both those rates would be up substantially from the 2.2 percent growth turned in during 1986.

The current recovery from the 1981-82 recession entered its 59th month in October, making this recovery the longest peacetime expansion on record.

For this year and next economists remain optimistic about growth, although they have been raising their forecasts for inflation.

They also are predicting consumer prices will rise by 4.5 percent this year, up substantially from the 1.3 percent inflation in 1986.

In other economic news on Monday:

-The nation’s automakers reported car sales fell 6.4 percent in late September compared with the same period a year ago, despite widespread incentive campaigns at some of the auto industry’s lowest interest rates.

-Oil production by the Organization of Petroleum Exporting Countries fell by an estimated 1 million barrels a day last month, but still remained above the cartel’s self-imposed ceiling, according to the Middle East Economic Survey, a respected oil weekly.

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