ECONOMISTS are fine-tuning their forecasts for next year. And they're all over the dial: 1995 is shaping up to be a tough year to predict.
Some economists believe that the United States economy will continue to bull its way forward, shaking off the interest-rate hikes of the Federal Reserve. Others, however, are predicting that the economy will be struggling by next fall.
The Blue Chip consensus forecast of 53 economists, meanwhile, is for real growth in gross domestic product (GDP), the nation's output of goods and services, of 2.9 percent - a moderate level of activity. The group expects inflation, as measured by consumer prices, to rise 3.4 percent in 1995 compared with about 2.6 percent this year.
Next year's forecast, says Donald Straszheim, a chief economist at Merrill Lynch & Co. in New York City, ``has been extraordinarily difficult.''
Adds Robert Dederick, an economic consultant to Northern Trust Company in Chicago: ``We are at the point now where the expansion is a little long in the tooth, so things get a little cloudy.''
There are several reasons for the clouds:
* Federal Reserve policy. Since the beginning of the year, short-term interest rates have risen a full 2.5 percentage points. The Fed is expected to tighten again at the end of January. The continuous rise in short-term rates is making some forecasters nervous.
``It's getting a little scary - it's starting to look like a classic indicator of a recession,'' says David Wyss, chief economist at DRI Inc., in Lexington, Mass.
* Uncertain fiscal policy in Washington. Wall Street economists are assuming that there will be some form of tax cut, thanks to the Republican Congress. However, it is not clear if the Republicans can enact real spending cuts in the budget. If the spending reduction does not match tax cuts, Mr. Straszheim says, ``Interest rates will spike up, and Washington will figure out this is a losing proposition.''
* A pickup in overseas economic activity. This should aid US exporters and relieve competition from imports. However, bustling exports also make it harder for the Fed to slow down the US economy.
The US economy is winding up the year with a bang. Straszheim expects the fourth-quarter GDP will come in at a real 4 percent annual rate. There are still plenty of signs that manufacturers' order rates are robust for such capital equipment as computers and steel mills. Economists predict that numbers will be released next week for November construction, and factory shipments will show a healthy rise.
On Tuesday, the Conference Board reported that consumers are ending the year in `high spirits,'' which ``strongly suggests that 1995 should be another good year for the US economy.'' Department stores reported that good weather on Dec. 26 brought out large numbers of consumers to post-Christmas sales.
But there are also some signs that the economy is beginning to respond to the Federal Reserve's past interest-rate hikes. The interest rate sensitive housing industry is slowing down modestly. When numbers are reported tomorrow, forecasters predict that new home sales in November will show a slight decline.
With these crosscurrents, it's not surprising that economic forecasters are split on the outlook for next year.
On the optimistic side is Jeffrey Given, chief economist at Robert Genetski & Associates Inc., in Chicago. The Genetski firm bases its optimism on the money pumped into the economy by the Federal Reserve two years ago. Genetski differs from most other forecasters who believe changes in Fed policy start to affect the economy in six to nine months.
``Other people have been forecasting a slowdown in housing for some time, but if you look, the housing market continues strong,'' Mr. Given says.
Since the Fed did not start to tighten until this year, the Genetski computer models don't predict a slowdown until 1996. The Genetski model was successful last year, predicting a more robust economy than the consensus forecast of 2.9 percent. This year Genetski is predicting real GDP growth of 3.6 percent.
Another optimist, Michael Keran, chief economist at Prudential Insurance Company in Newark, N.J., says the economy will remain strong because of the surge in bank loans. Since many of those loans are to small businesses, which are historically labor intensive, Mr. Keran expects continued strong employment growth. By the end of the year, however, he anticipates that more ``aggressive'' Fed tightening this winter will start to bite into the economy.
The pessimists say the Fed's tightening is already taking a toll - a heavy toll. By the fourth quarter of next year, Mr. Dederick expects the annual economic-growth rate to be 0.9 percent. This weakness will extend to the first two quarters of 1996. This is the ``bumpy'' landing scenario.
``I think the Fed will raise interest rates so there is a bigger slowdown than the Fed wants,'' Dederick says. If the economy does not respond to the Fed's efforts this year, Dederick is even more pessimistic, expecting a recession in 1996.