Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 11, 1994 TAG: 9403110069
SECTION: BUSINESS PAGE: A-9 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The newsletter Blue Chip Economic Indicators said Thursday that the consensus of 51 analysts it surveyed in early March projected growth of 3.6 percent, up from last year's 3 percent expansion and the biggest since a 3.9 percent advance in 1988.
The Blue Chip forecast was even stronger than its 3.3 percent consensus in February and is 0.6 percentage points above its January projection.
Robert J. Eggert, editor of the Sedona, Ariz., newsletter, wrote that it was "one of the largest two-month gains witnessed in our 17-year history of surveying."
Eggert also said the forecast "is higher than at any time in the past five years."
The government has said the gross domestic product shot up 7.5 percent at an annual rate in the final three months of 1993, the steepest advance since a 7.9 percent jump in the first three months of 1984. The GDP is the total output of goods and services within the United States.
"Many of the 35 economists who raised their forecasts this month cited the unexpectedly large 7.5 percent surge in fourth-quarter growth and the apparent momentum the economy carried into the first quarter of this year," Eggert said.
Besides that momentum, the analysts mentioned improved job prospects, a 1 percent increase in wages and salaries in January and continued strength in orders for durable goods and automobile sales.
But they agreed that the economy could not sustain the 7.5 percent pace of October-December, and it will slow to a still-healthy 3.1 percent rate in the first three months of 1994.
And their optimism paled somewhat for 1995, when the consensus sees another slowdown, to 2.8 percent. The economists represent banks, businesses, forecasting services, universities and Wall Street firms.
"In spite of stronger economic growth, no big jump in inflation is indicated," Eggert reported. "It appears that we will have the best of both worlds - good growth and low inflation."
The consensus sees inflation rising at a 2.8 percent rate this year. That would be little changed from the 2.7 percent increase in the government's Consumer Price Index in 1993, which was the lowest since 1972.
"However, prospects for the CPI in 1995 rose a tenth of a percentage point [from the previous survey] to 3.3 percent," Eggert said.
Unemployment was projected to remain at 6.5 percent this year before sliding to 6.2 percent in 1995. The jobless rate fell to 6.5 percent in February, from 6.7 percent a month earlier.
by CNB