Study Warns Of Economic Collapse; Trade Imbalances Seen as Big Danger
The global economy faces a collapse not equaled since the Great Depression of the 1930s if the major nations fail to take quick and drastic steps to cut the U.S. trade deficit and equivalent surpluses in Europe and Asia, 33 leading economic experts warned yesterday.</br></br>That danger, they said, was signaled by the stock market collapse around the world in October and by an earlier plunge of the U.S. bond market.</br></br>The economists' conclusions were contained in a report issued here by the Institute for International Economics and simultaneously published by eight other international research centers.</br></br>The economists said Americans would have to accept a sharp cutback in personal consumption in the years ahead so that more U.S.-made goods could be shipped abroad to reduce the trade deficit.</br></br>As this somber forecast was issued, the Reagan administration was nearing completion of its official estimates for economic growth next year, lowering its prediction by about 1 percentage point to reflect the impact of the October stock market collapse.