Many forecasters focus on the economy's performance in the near term. They concentrate on how strong inflation will be by year's end or how much economic growth will slow in 1985.
But Prof. Jay Forrester of Massachusetts Institute of Technology (MIT) focuses on the economy's long-term prospects by using what could be called the Beach Boys theory of economics.
''Catch a wave and you're sitting on top of the world,'' says a song by the rock group that former Interior Secretary James Watt helped keep famous.
In some ways, the United States economy has been like the surfer in the song, according to research conducted by Professor Forrester. The nation has been riding the crest of a giant economic wave that has contributed significantly to the overall level of prosperity.
But now the economic wave is about to crash on the shore, Forrester's research indicates, causing individuals and firms who have been riding the wave to tumble into troubled economic water. The woes he foresees include rising unemployment, falling capital-goods production, increased pressure on US and foreign governments to repudiate their debts, and resulting turbulence for financial institutions like banks.
The ''wave'' Forrester is talking about is a 45- to 60-year cycle of economic growth and decline. He contends that, for a variety of interrelated reasons, economies grow for 20 to 30 years, hit a plateau for 10 years or so, and then enter into a depression that lasts about a decade before the cycle starts again.
This long wave is separate from smaller fluctuations in the business cycle, which run three to seven years between peaks. For a time, a business cycle recovery, such as the one US is now enjoying, can obscure a longer-term decline, Forrester argues.
''I believe (the industrialized economies) are past the economic high tide and that for the next decade the economic tide will be falling,'' Forrester says. ''A bright new decade lies ahead, but it begins a decade from now.''
The long-wave theory is not universally accepted by other economists. But the research being conducted by Forrester and colleagues at MIT's Sloan School of Management is worth considering because it is based on a systematic approach to potential future events and it offers avenues for reducing the turmoil the researchers' economic model now is predicting.
The theory of economic long waves was first put forward by Soviet economist Nikolai Dmitriyavich Kondratyev, an early victim of Stalin's purges. Critics contend the ''Kondratieff cycle'' tends to be accepted by those who see a mystical pattern of history ''that permits true believers in theory to divine the future,'' notes Ago Ambre, a senior economist at the US Commerce Department.
But the MIT researchers are in a better postion to defend their theory than other adherents have been. They have developed a mathematical model of the economy - the System Dynamics National Model - which is based on government and corporate operating policies. The model produces the familiar short-term business cycle as well as the 45- to 60-year long wave.
The model offers ''for the first time a cohesive theory to explain how a major rising and falling economic patern spanning a half century can be systematically and internally created within an economy,'' Forrester says. He spoke at a conference sponsored by the Congressional Clearinghouse on the Future and in a telephone interview.
While many economists are not willing to accept all of Forrester's conclusions, they do not dismiss his work out of hand. Chase Econometrics, for example, forecasts up to 20 years in the future for some utility companies and 10 years in the future for many corporate clients, says Edward Friedman, a senior economist with the firm. Major shifts in population are key factors Chase considers in its forecasting.
''There is some basis'' for believing that demographic factors could provide evidence for Forrester's investment-related theory, Mr. Friedman says. Overbuilding of capital is one of the major causes Forrester cites in predicting a downturn in the long wave.
There's no doubt there have been long waves of movement in prices, unemployment, and economic growth, notes Robert Gough, senior vice-president of Data Resources Inc., a major forecasting firm. ''The relationships Kondratyev pointed out and Forrester has expanded on certainly exist. But those relationships are not inevitable,'' Mr. Gough says.
Forrester's model indicates that the decline of the long wave of economic activity is tied to overbuilding of business plant and equipment throughout the economy. Along with this overbuilding goes a surge in debt. Eventually the overbuilding stops, pushing up unemployment which ripples through the economy.
The excess production capacity in the economy tends to put downward pressure on prices and profits, thus making companies less able to pay their debts. As a result, banks have to write off business loans, and the price of producing assets, like farm land, falls.
There are already signs that we are at the start of a major downturn, Forrester asserts. The signs include unusually high real interest rates, reduced business return on investment, slipping agricultural land prices, declining rates of productivity growth, and a long-term upward trend in unemployment where every peak in joblessness is higher than the previous peak.
What should the nation do to deal with the dangers he sees?
For one thing, the US should prepare to deal equitably with default by third world debtor nations and the effect this would have on US banks, Forrester says.
He does not favor having a government body set industrial policy in an effort to cope with the turmoil he sees ahead. ''Hope lies not in (the government) trying to decide what to do, but in removing barriers to experimentation,'' he says.