Newspaper article THE JOURNAL RECORD

Reagan Administration Lowers Economic Forecast for 1987

Newspaper article THE JOURNAL RECORD

Reagan Administration Lowers Economic Forecast for 1987

Article excerpt

The Reagan administration is lowering its forecast for economic growth in the coming year as work continues on a proposed $1.02 trillion budget for fiscal 19secutive month in November, the Labor Department said Friday.

And American consumers continued to borrow heavily in October, taking on $6.78 billion more in installment debt than they paid off, the Federal Reserve Board said. Much of the new debt was used to buy new cars.

Instead of the 4.2 percent growth the administration had predicted, top-level government economists have projected growth at a less-optimistic 3.5 percent for the coming year, administration sources said.

However, the three officers who must sign off on the economic figures that will be plugged into the budget - Treasury Secretary James Baker, budget director James Miller and Beryl Sprinkel, chairman of the Council of Economic Advisers - have yet to reach agreement on this figure, the sources said.

Changes in economic conditions have an important bearing on the budget deficit because lower growth could result in lower receipts, increasing the budget shortfall.

In rough terms, each percentage point that growth falls below projections is accompanied by an increase in the budget deficit of $6 billion - all other factors being equal.

The $6.78 billion in net installment debt incurred by consumers in October followed a $7.72 billion September increase.

While the number of jobless rose by 41,000, to 8,283,000, in November, employers reported adding 250,000 new jobs to their non-agricultural payrolls for a third month in a row, the Labor Department said.

Factory jobs rose by 47,000 on a seasonally adjusted basis to edge above 13 million for the first time since May, although total manufacturing employment is still 96,000 below a year ago, the department's Bureau of Labor Statistics said. …

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