Economists Grow Less Pessimistic on '87 --- Data Indicate Stronger-than-Expected Start
NEW YORK -- Until last week, Edward Yardeni of Prudential-Bache Securities Inc. had been expecting a recession in the first half of this year. "A slump is still possible," he says, "but now we feel more comfortable with a muddling-through scenario."</br></br>Mr. Yardeni had been more pessimistic than most economists; few analysts expected an actual recession this year. But many forecasters are beginning to wonder if their earlier predictions weren't a shade too gloomy. Recent statistics -- notably, employment, new orders and industrial production -- indicate the new year may be getting off to a faster-than-expected start.</br></br>"The strong employment gains in January show that the economic rebound has developed a good deal of momentum," says Sam Nakagama, a New York-based economic consultant. Non-farm payroll employment rose a sharp 448,000 last month after increasing 225,000 in December.</br></br>Robert Genetski, an economist at Chicago's Harris Trust & Savings Bank, says, "The latest economic numbers show a burst of activity toward year end. In the final three months of the year, industrial production, personal income and wages and salaries rose at close to a 6% annual rate. Perhaps of greater significance is the surge in manufacturers' new orders, which suggests future strength. In December these orders, excluding defense, jumped 10% from their levels of last summer and fall."</br></br>Mr. Genetski expects the inflation-adjusted gross national product to grow at a 3.6% annual rate in the current quarter, a sharp rise from the 1.7% rate in the fourth quarter. Other factors influencing Mr. Genetski and other optimists: rapid growth of the money supply, a belief that the trade deficit will continue to shrink, and the help that higher oil prices will give the U.S. oil industry.