Companies' Layoff Plans Contradict Economists' Belief Recession Is Over
The recession, most economists agree, is over. So why are some of America's biggest companies, like Du Pont Co., Digital Equipment Corp. and Atlantic Richfield Co., planning to lay off thousands of workers?</br></br>These contradictory signals about where the economy is headed have caused some head scratching -- and some second-guessing about the nascent recovery.</br></br>"Corporate executives and macro-economists are on different planets at this point," says Robert Reich, a professor at Harvard's Kennedy School of Government. "Who's right? Inevitably, it's the executives. What they anticipate becomes self-fulfilling -- they'll make the key decisions about borrowing, investment, cost-cutting, everything."</br></br>Even if the economy avoids slipping back into recession, the recovery will be historically lethargic, many now say, with gross national product growing at about 3% rather than the customary 6% annual growth for post-World War II recoveries. Adds Richard Belous, senior economist at the National Planning Association, a research group representing business and labor: "When you go sector by sector, it starts looking like we may have another dip down into recession or a recovery so sluggish it's indiscernible."</br></br>Not so quick, responds Richard Rippe, chief economist at Dean Witter Reynolds Inc. "Absolutely, we are in a recovery. We bottomed out in April and gains will continue with no double dip," he contends. "I don't find the evidence of layoffs startling as some do. Unpleasant, maybe, but not startling."