
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, March 9, 1991                   TAG: 9103090256
SECTION: BUSINESS                    PAGE: A8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WILLIAMSBURG                                LENGTH: Medium

ECONOMISTS DISAGREE ON WHEN RECESSION WILL END IN VIRGINIA

Economists say the return of troops to Virginia will spark a brief spending frenzy, but they disagree on whether the recession will be over any sooner as a result.

"Already, there are some signs of life out there," said J. Alfred Broaddus Jr., a senior vice president and research director of the Federal Reserve Bank of Richmond. "Two or three weeks ago, there weren't any signs of life at all."

The Fed's survey of car dealers, retailers and other business people found that "people are becoming more optimistic," Broaddus said Thursday at a meeting of the Virginia Association of Economists.

He said the quick end to the Persian Gulf War slowed inflation and held interest rates down, prompting economists to change their forecast.

In late January, economists generally agreed that the economy would begin rebounding in the third quarter, Broaddus said. Now, the consensus is that the turnaround will begin sooner.

"We now expect Virginia's recession to end in the second quarter, led by a moderate but clear rise in consumer demand," said a report by Roy Pearson, director of the Bureau of Business Research at the College of William and Mary.

Pearson, president of the state economists group, predicted that retail sales and personal income in the state should once again be growing faster than the rate of inflation by the third quarter.

Two other economists were less optimistic.

Alan Gayle, chief economist for Richmond-based Crestar Bank, said his tracking of economic indicators in previous recessions has convinced him the current downturn is only one-third to one-half over.

He called the return of consumers to stores and restaurants a "positive uptick," but added: "I don't think it's going to be lasting."

John Whaley, chief economist for the Hampton Roads Planning District Commission, said consumer spending and tourism will pick up, and local ship repairers will benefit from the return of Navy ships.

But he said there are so many other weak spots in the Virginia economy that recovery cannot be expected until at least the third quarter.

by CNB