NEW YORK - The Reagan administration has marked its forecast for the economy's growth next year down to 3.2 percent, from 4.2 percent, but this did not upset the securities markets. On the contrary, the markets seemed to welcome the new forecast as representing a gain in realism; theeryl W. Sprinkel, the administration's chief economist, predicts that consumer prices will rise by 3.8 percent next year compared with 0.7 percent so far this year, but that interest rates will decline, with the average annual rate on three-month Treasury bills coming down to 5.4 percent, from 6 percent this year, and the rate on 10-year Treasury bonds dropping to 6.7 percent, from 7.7 percent this year.
But while the standard forecast for 1987 is for moderate growth - the adjectives range from ``sluggish'' and ``soggy'' to ``healthy'' and Sprinkel's ``pretty good'' - there is a lot of apprehension around that the economy is in deeper trouble than the conventional forecast registers. The Iranian crisis has intensified this apprehension that somehow, before the political crisis is over - and it could last through the 1988 election - there will be an economic fallout.
With all these anxieties, there are really two standard forecasts: the Aboveground forecast of slow but steady growth, and the Underground forecast of deep recession and financial crisis. The Aboveground forecast is rational, and based on what can be observed in the economic data, on consumers' behavior to date, on the lack of panic in the markets and on the assumption that the administration and the Federal Reserve will hold things together.
The Underground forecast is emotional but not necessarily irrational. It is based on worries about the excess of public and private debt and on the memory of economic catastrophes of the past that happened despite assurances that they would not happen. Kurt Richebacher, the former chief economist of West Germany's Dresdner Bank, is one who lifts his Underground forecast aboveground.
What the United States has been experiencing since 1984, he says, is ``a tug-of-war between structural depressants, strangling parts of the economy, and aggressive monetary expansiveness, overstimulating other parts.'' He warns that easy money can only postpone the recession at the cost of aggravating the depressive influences, worsening overindebtedness and the structural imbalances and distortions. He concedes that there is no question that the Federal Reserve, in a crisis, would ``swamp the banking system with liquidity, regardless of all other considerations, including the dollar. …