Newspaper article THE JOURNAL RECORD

Business Leaders Predict Economy to Be Strong through 1988 Election

Newspaper article THE JOURNAL RECORD

Business Leaders Predict Economy to Be Strong through 1988 Election

Article excerpt

By Martin Crutsinger HOT SPRINGS, Va. - Executives of the country's largest corporations predicted Friday that the economy will weather rising interest rates and higher inflation and will still be going strong through the 1988 presidential election.

The Business Council, composed of chief executives of 65 top U.S. corporations, said the country would be helped this year and next by a reviving manufacturing sector.

In their semiannual economic report, the executives were more optimistic about business prospects than they had been just five months ago even though they now believe inflation will be worse this year and interest rates higher than previously predicted.

While the higher interest rates have already hurt such industries as housing and sales of big-ticket consumer products, the executives said that marked improvements in the ability of American manufacturers to sell overseas were offsetting those adverse effects.

They said that the U.S. foreign trade deficit, after removing the effects of inflation, would show an improvement this year for the first time this decade.

The executives predicted the gross national product, the broadest measure of economic health, would expand by 3 percent this year and in 1988, in contrast to weak growth of 2.2 percent last year.

And almost one-third of that growth will come from improvements in the trade deficit, they forecast.

``This export-led growth represents a sharp reversal of the trend from 1982 through 1986, when the decline in real net exports subtracted about 1 percentage point per year from the growth of GNP,'' the council said in its report.

While the stock market has been battered this week by investor worries about inflation and higher interest rates, the business executives said these forces would not gain enough momentum to derail the current recovery, which at 60 months is already the longest peacetime expansion in U. …

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