Magazine article American Banker

Levy Institute Bears Foresee a Slump in '93

Magazine article American Banker

Levy Institute Bears Foresee a Slump in '93

Article excerpt

There are bears -- an then there is the Jerome Levy Economics Institute.

The economists at the think tank in New York's Hudson Rive Valley have been among the nation's most downbeat economic forecasters for more than two years. In November 1990, they began describing the economy as being in a "contained depression."

Their outlook isn't changing.

What's disturbing to the White House and other optimists is that the Levy group has thus far been proven right. After expanding by 2.9% in the first quarter, gross domestic product fell to a meager 1.4% growth rate in the second.

"We expect another economic downturn in 1993," said David A. Levy, vice chairman of the institute, which was founded in 1986 by the Levys and the trustees of Bard College, of which the institute is a part.

S. Jay Levy, David's father and chairman of the institute, extended the grim prediction: "I think things are going to stay in a rather depressed state for at least the next two years."

The Levys' chief evidence? investments in fixed assets such as manufacturing plants and office buildings, what David Levy calls "the real engine of growth," is not occurring. Moreover, no fiscal stimulus, such as a change in individual income tax withholding, is in the wind to help the economy this year.

Long-Range View

"I wouldn't want to be selling Easter apparel next year," said the younger Mr. Levy, looking well beyond the Christmas shopping season predictions most economists are now making.

Banks and other financial institutions aren't helping much to stimulate a rebound, he added. …

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