Forecasting Service Sees Signs of a Recession in '96

Article excerpt

One of the most influential economic forecasting services in the country is starting to worry about a recession.

The forecasting service, The Center For Business Cycle Research, says that it officially doesn't see a recession in the foreseeable future. But the center, which is extremely influential with the Federal Reserve Board, says one of its gauges has suddenly started giving off warning signals.

"We don't see a recession, looking at the long leading (economic) index, yet," said the center's Lakshuan Achuthan.

But he adds that "I'm worried about a recession because there is a black cloud. The black cloud is the leading index of employment."

The Center For Business Cycle Research is influential because of Fed Chairman Alan Greenspan's long friendship with Geoffrey Moore, the head of the center. The Fed has also been relying heavily on the Center and other outside research organizations because it distrusted the economic research being done by some other branches of government.

Achuthan believes the nation's unemployment rate will soon go over the 6 percent level later this year and could average 6.4 percent between now and year's end. And that, he says, means a recession should arrive in the middle of 1996.

But waiting for recession can be a lot like waiting for hurricanes. Sometimes you can be patient a lot longer than you expect; sometimes the storm arrives quickly.

Achuthan believes that corporate restructurings have changed the relationship between employment trends and recessions. …