They Threaten To Choke Off A Recovery: Interest Rate Behavior Colors ...
The economic news last week tended to confirm that the recession may have hit bottom in May, but developments in financial markets offered new threats to the longevity of the recovery most forecasters expect later this year.</br></br>The uncertain outlook has prompted the Reagan administration to launch a far-reaching review of its economic policies that could lead to changes if the high level of interest rates continues and the recovery proves weak, .Treasury Secretary Donald T. Regan disclosed.</br></br>Several statistics for May, coupled with earlier reports on employment and retail sales, indicated that the recession may have ended 10 months after it began last July. Industrial production declined only 0.2 percent after much larger drops in both March and April. Housing starts jumped above a 1-million unit annual rate for the first time since the recession began. And personal income climbed 0.7 percent, the largest increase since November, and personal outlays increased 1.3 per- Û¢ cent.</br></br>Commerce Secretary Malcolm Baldrige, ticking off some of these numbers, told reporters he expects the gross national product, adjusted for inflation, to post a small increase for the current quarter following two quarterly declines. His departmentÛªs so-called flash estimate for the current period will be available this week.	_</br></br>A.	jVolcker told CongressÛª Joint Economic Committee that the latest statistics are those that ÛÏtend to accom-pahy a leveling out of a recession and the beginnings of a recovery."