Upturn no longer 'just around the corner' -- it's here
Boston — It may be hard to believe, but the economic recovery has started. According to a poll of 45 economists by Blue Chip Economic Indicators (Sedona , Ariz.), nearly two-thirds of this group believe the upturn actually started in December or is beginning this month.
One prominent economist not surveyed, Alan Greenspan, President Ford's top economic adviser, agreed: ''The first signs of recovery are now finally occurring.''
Says Robert J. Eggert, editor of the Blue Chip newsletter: ''With the improvement of housing starts and better auto and appliance sales, it does appear the recovery is at hand, though quite sluggish.''
Retail sales for December, to be announced by the Commerce Department today (Jan. 12), may give some clue as to which of the two months is correct. Citibank suspects that because total retail sales may not have risen as much as they usually do in December, the seasonally adjusted figure may show a decline.
Most of the other leading economists surveyed by Blue Chip Economic Indicators figure the recovery will start in February or March.
Whatever, all the talk by doomsayers of the economy's slipping into a depression has proved to be just that - talk.
According to the economist panel, however, the recovery will be modest. The consensus of the group, according to Mr. Eggert, calls for year-over-year real growth in 1983, after taking account of inflation, of a ''poky 2.5 percent.''
This, he noted, ''is a conservative outlook when we compare it with the more normal 6 percent advance characteristic of the first year following a recession.''
The Reagan administration is even gloomier in its forecast. It is predicting for 1983 only a 1.4 percent real gain in gross national product, the output of goods and services, over 1982. That compares with a decline of 1.8 percent in GNP in 1982 from 1981. The forecast, however, calls for growth to step up to a 4 percent annual rate in the second half. Among those 45 economic views compiled by Mr. Eggert, the GNP forecasts vary enormously, from 4.9 percent by Econoviews International Inc. to 0.9 percent by Evans Economics. Mr. Eggert, an economist himself, predicts a relatively optimistic 3.5 percent growth.
Some other average predictions coming from this survey, made earlier this month, include:
* Unemployment will average at more than the double-digit level (10.3 percent) throughout the year. But the consensus expects a slow drift downward from the record postwar monthly rate of 10.8 percent in December.
Mr. Eggert added: ''The group still expects a jobless rate that will average 9.3 percent even into 1984, with a downslide to 8.9 percent delayed until the fourth quarter of next year.''
* Inflation, as measured by the consumer price increase, will fall to 5 percent. But the economists suspect inflation will rise to 5.5 percent in 1984.
* Looking at 1984, the consensus sees a real growth rate in GNP of 4.4 percent.
* Some 36 financial analysts in another survey put the prime rate at an average 9.8 percent at its low point this year. Some two-thirds figure this low point will occur in the first half of 1983, with March the most frequently mentioned month.
* Some 35 economists were willing to guess, ''off the record,'' on the Dow Jones industrial average. Their average had this indicator rising to 1,095 in six months (it closed at 1092.07 on Monday), to 1,150 in 12 months, and 1,190 in 18 months.
Alan Murray, an economist with Citibank, notes that the poor fourth quarter of 1982 means that it will take faster growth in 1983 to raise the average for the year more than 3 percent over '82. His bank, for instance, has just revised its GNP prediction downward for 1983 from 3.1 to 2.7 percent, on a year-over-year basis. That was because of the Commerce Department's flash forecast that GNP dropped at a minus 2 percent annual rate in the October-December period.
On a quarterly basis, however, his bank's forecast assumes real GNP growth at annual rates of 4 percent in the first quarter, 5 percent in the second, and 4 percent in the last half. The administration expects 1 percent in the first quarter, 3 percent in the second, and 4 percent in the last half. Citibank assumes a large boost in the first quarter because of a change in inventories.
In general, however, the record of economists in forecasting quarterly economic patterns is extremely poor.
Whatever, it may well be that the administration has underestimated the extent of the recovery this quarter. Leonard H. Lempert, director of Statistical Indicator Associates, North Egremont, Mass., comments: ''Our feeling is that the subdued recovery being set forth by many economists is unduly pessimistic.''
What economic forecasters are saying about 1983 Percentage Change, 1983 over '82 Percent un- Real GNP Consumer emloyment, GNP deflator prices 1983 Wharton Econometric 2.4 5.2 4.9 10.5 Merrill Lynch 2.2 5.6 4.9 10.6 Chase Econometrics 2.1 5.0 4.8 10.3 UCLA 1.9 5.1 3.9 10.9 Data Resources Inc. 1.6 5.3 5.1 10.7 Evans Economics 0.9 5.0 4.7 11.4 Blue Chip Consensus 2.5 5.1 5.0 10.3 Source: Blue Chip Economic Indicators