The US economy will continue to grow in 1998, but at a slower pace than last year, as financial turmoil in Asia, rising wages and leaner corporate profits check growth, the Wall Street Journal reported yesterday. The consensus emerged from a survey of 55 economists participating in the newspaper's semi-annual economic forecasting survey.
If the economists are correct, the expansion that began in April 1991 will have lasted more than seven years, the second-longest period of non-stop economic growth in this century, the newspaper said.
The longest, 106 months in the 1960s, will be surpassed if the current expansion extends to January 2000, it said.
The economists predicted short-term and long-term rates would stay at roughly current levels through the year, unemployment would remain below 5 per cent and inflation would inch up only slightly from current low levels.
The consumer price index rose less than 2 per cent for the first 11 months of 1997.
The economy, as a result, will grow at a 2.4 per cent clip in the first half and 2.1 per cent in the second half, the economists said. That would be below 1997's growth rate, which is expected to be about 3.7 per cent when the final numbers are tallied.
The newspaper noted that economic growth in 1997 was the best since 1988.
It said it caught by surprise most economists, who were accustomed to seeing business expansions lose momentum as pent-up demand for computers, cars and new homes was satisfied.
But it said only one economist surveyed even hinted at a recession this year, largely because the majority expected the Federal Reserve either to lower interest rates or leave well enough alone.
