Any Bright Ideas Out There?

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The U.S. economy is in a mess and no one in Washington seems to have a clue how to get out of it. There was a flash of good news last week, when the government reported that the gross national product grew at a 2.4% annual rate in the third quarter. But it was quickly doused by a torrent of dismal reports showing last summer's rebound to be short-lived. Sales of new homes plunged 12.9% in September despite the lowest mortgage rates in 14 years. Consumer- confidence sagged in October to levels not seen since the height of the Persian Gulf war, and the unemployment rate for the month crept up 0.1%, to 6.8%. Even normally reticent Federal Reserve Chairman Alan Greenspan admitted in a speech last week that the economy had recently turned "demonstrably sluggish."

Reviving this economy is proving to be one of the toughest challenges of the century. In previous downturns, policymakers were able to jump-start the engine through tax cuts, higher government spending and falling interest rates. But this time around, such techniques either haven't worked or are difficult to implement. Though interest rates have been falling since 1989, overextended banks won't ease up on new loans. Budget deficits exceeding a quarter of a trillion dollars discourage tax cuts or spending increases for fear of renewed inflation and higher interest rates.

What to do? Here are the recommendations of 10 economists from around the U.S.

Roger Brinner

chief economist

Data Resources

economic-research firm

Lexington, Mass.

-- Federal Reserve should cut interest rates 1% immediately.

-- Congress should not cut personal income tax rates. It would be too costly for the budget, heighten worries of inflation, and raise long-term interest rates.

-- Fund extended unemployment benefits to the jobless, and pay for them by cutting fat in other federal programs like Amtrak and government pensions.

-- Introduce a 10% investment-tax credit specifically for manufacturing equipment.

Don Conlan

president

Capital Strategy Research

economic-consulting firm

Los Angeles

-- Don't tamper -- under any circumstances -- with last year's accord to reduce the budget deficit. Changing it now would open a Pandora's box of troubles and raise inflation fears.

-- Greenspan's Federal Reserve, too cautious with monetary policy so far, should allow short-term rates to fall a little more.

Fred Conrad

chief economist

Eastman Chemical

producer of plastics, fiber and chemicals

Kingsport, Tenn.

-- Do nothing. Let the economy rehabilitate on its own from the excesses of the 1980s. Quick fixes could end up doing more harm than good.

-- Falling interest rates this year should be given more time to take effect.

Kathleen Cooper

chief economist

Exxon

Irving, Texas

-- Do not change personal income tax rates or increase government spending. The budget deficit is already too high.

-- Focus more on monetary policy. The Federal Reserve should gradually continue to reduce short-term interest rates.

John Godfrey

chief economist

Barnett Banks

Jacksonville