Growth to Slow After Strong '97, Says Panel
The annual report of the president's Council of Economic Advisers released yesterday begins not with cautious assessment but a sweeping celebratory declaration: "The past year saw the nation's economy turn in its best performance in a generation."</br></br>The report ticked off the now-familiar figures for strong economic growth -- the rapid rise in jobs, the drop in unemployment to a 24-year low and a decline in core inflation to the lowest level since the mid-1960s. "The economy is remarkably free of the symptoms that often presage an economic downturn -- such as an increase in inflation, an accumulation of inventories or evidence of financial imbalance," the council members wrote in the report.</br></br>Only in the administration's forecast for the next three years does the CEA turn cautiously conservative.</br></br>Like many private-sector economists, those at the CEA believe that some special factors, such as the huge run-up in the stock market, helped push inflation-adjusted economic growth to 3.2 percent in 1996 and 3.9 percent last year. As the impact of those forces wanes, so, too, will the nation's growth rate, which is forecast to drop to 2 percent this year and stay there for 1999 and 2000.</br></br>"We have had an utterly exceptional rate of growth," which has reduced unemployment to a level at or below that regarded as full employment by many economists, CEA Chairman Janet L. Yellen told reporters. "Our forecast is sufficient to keep the economy operating in that full-employment range."