Odds Of Recession Vary, Depending On Who You Ask Most Recent Economic Surveys Support ‘Soft Landing’ Theory

The economy has reached the long-discussed “soft landing,” with no recession in sight, top analysts believe.

The consensus of the latest surveys by the National Association of Business Economists and the newsletter Blue Chip Economic Indicators projects the economy growing 2.9 percent this year and 2.4 percent in 1996.

“Out of 49 respondents, only one anticipates that a recession will begin this year,” the business economists said in releasing their survey results Monday. “Three more expect the next recession to begin sometime in 1996.”

None of the 52 forecasters interviewed in Blue Chip’s survey expected a recession in either year.

The term soft landing often is used to describe an economy slowing sufficiently to keep inflation in check without stalling into a recession. That was the Federal Reserve’s goal as it boosted short-term interest rates seven times in 15 months.

But after the economy slowed almost to a stop last spring, and without any serious inflation pressures in sight, the central bank notched rates down slightly in July.

The business economists conducted their survey in August. The results were released at the association’s annual meeting in San Francisco. The Blue Chip poll of 52 forecasters was taken earlier this month.

The two polls produced identical readings on inflation - 3 percent this year and 3.2 percent in 1996. The Consumer Price Index rose 2.7 percent in 1994.

They also showed similar feelings about unemployment prospects.

The business economists’ consensus calls for the jobless rate to fall to average 5.7 percent this year, down from 6.1 percent in 1994, before edging up to 5.9 percent next year.

The consensus in the survey sees unemployment of 5.7 percent this year and 5.8 percent in 1996.

The business economists’ forecast of 2.9 percent economic growth this year is weaker than the 3.2 percent consensus in the association’s previous survey last May, although the latest forecast for 1996 is a bit stronger than the earlier 2.2 percent.

Economic growth slowed from a 5.1 percent annual rate in the final quarter of 1994 to 2.7 percent in the first quarter of 1995 and just 1.1 percent in the second.