Word: ecksteins
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...when layoffs hit. The Government has set up many federal mortgage lending institutions that will keep housing from falling through the floor. Besides, businessmen have cautiously avoided the excesses that in the past have led to precipitate tumbles. Inventories in warehouses and on store shelves are lean, although Otto Eckstein, head of Data Resources Inc., notes that the Iranian crisis and fear of an oil crunch have lately moved some businessmen to stock up in fear of more general shortages...
Board members pointed out that an amendment to balance the budget would straitjacket the economy, particularly during a recession, when deficit spending often is prudent to spur a recovery. Otto Eckstein noted that because tax revenues fall during a recession, Congress would have to raise taxes in order to balance the budget, and that would bury the economy even deeper...
...forecast of a 4.7% G.N.P. growth was a hopeful near-point above the actual 3.8%, and Chase Econometrics' estimate of 7.4% unemployment a gloomy plateau above the actual 6%.) The most meticulous scientific methods of forecasting economics-so says one of the foremost prophets, Boston Econometrician Otto Eckstein-produce results with errors only 35% to 40% smaller than those arising from careful guesstimating. Perhaps unnecessarily, Eckstein adds: "There's plenty of room for humility." The humbling failure of scientists to predict surely either the course of nature (as in the weather) or cultural dynamics (as in economic...
...board members have some differences about the outlook. Eckstein thinks the recession will last only two quarters; Robert Nathan, a Washington economic consultant, fears that it may stretch out over as many as four. The consensus is two or perhaps three quarters. Eckstein calculates that corporate profits after taxes will rise only 5% next year, vs. 14% in 1978-and will go up even that modestly only because the tax rate on most corporate income will drop from 48% to 46% on Jan. 1. Arthur Okun, senior fellow at Washington's Brookings Institution, put the increase even after taxes...
...economists on the TIME board fear that their forecast may be too optimistic. Eckstein sees a 1-in-5 chance that frenzied borrowing, and buying of houses and other goods by consumers before prices go up even more, would continue to keep expansion rolling through much of next year. It would be nothing to cheer about, he adds, because inflation would continue to accelerate and the Government would have to press down even harder on the economy. Result: a recession that does not start until late 1979 but is then worse than anybody now foresees, lasting for as many...