Nation: The Risk of Recession

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Will Jimmy Carter's rescue operation lead to a recession? A growing number of economists are forecasting one for 1979, with their odds varying from about fifty-fifty to 2 to 1. Members of the TIME Board of Economists see it this way:

Arthur Okun of the Brookings Institution: "A recession is now a probability rather than a possibility for next year."

Otto Eckstein of Data Resources, Inc.: "In the end all the President could do was follow the Republican recipe, to tighten up the economy. It has never worked without a recession."

Robert Triffin of Yale University: "The new program gives convincing evidence that the U.S. will fight inflation, but recession is a serious danger. We may have to accept an interim period of this unpleasantness."

Joseph Pechman of Brookings: "The President's program substantially increases the probability of a recession very soon."

Consultant David Grove: "There may be no way to break the back of inflation without recession. We aren't capable of fine tuning." but recession is a serious danger. We may have to accept an interim period of this unpleasantness."

Joseph Pechman of Brookings: "The President's program substantially increases the a recession very probability of soon."

Consultant David Grove: "There may be no way to break the back of inflation with out recession. We aren't capable of fine tuning."

Alan Greenspan of Townsend-Greenspan and Co., Inc.: "Carter's actions significantly increase the probability of recession by mid-1979."

A recession is roughly defined as two consecutive quarters of real decline in the gross national product. Most of the six U.S. recessions since World War II have started with high interest rates' causing a slowdown in housing. Then; came reduced consumer spending and cutbacks in business outlays for plant and equipment. Even if the prospective recession follows that traditional pattern, though, most economists now believe it will be comparatively mild and not a repetition of the severe downturn of 1973-75.

One of the more pessimistic views is held by James Howell, chief economist and vice president of Boston's First National Bank. He thinks the economy has sufficient momentum to carry it to the beginning of the second quarter in 1979, but "then the country will have a tough row to hoe for the remainder of the year." Howell expects 2 million people to be added to the unemployment rolls, leading to a jobless rate of about 8% (compared with a high of 9.2% during the last recession). A. George Gols, an economist with Arthur D. Little, Inc., expects a recession that "only technicians will be able to define." There may not actually be two successive quarters of negative growth, he says. A quarter of decline might be followed by a quarter of slight growth, then back to a decline. "It will feel painful," says Gols. "When you sprain or fracture an ankle, it still hurts."