Economic Outlook for the Early 1980's: Mixed Signals in a Changing Setting.

A review and analysis of the economic outlook for the early 1980s, this paper emphasizes the uncertainties that characterize current predictions. It begins with the highlights of the consensus forecast that predicts a mild to moderate recession tapering off after midyear 1980, with a sluggish recovery extending through 1981 and probably 1982. The study reviews the outlook for the early 1980s as predicted by a number of major economic forecasters. It includes an appended background discussion of the nature and methodology of macroeconometric forecasting and points out basic problems and criticisms raised regarding macroeconomic models. With this groundwork, the discussion proceeds to an analysis of major forecasts in a number of areas. Briefly, it predicts that inflation will continue at double-digit rates, the gross national product will decline in 1980, there will be a recession in consumer spending, interest rates will peak in early 1980, the housing and automobile industries will be sources of weakness, and government sectors will be sources of economic restraint. The author notes that the early 1980s are expected to bring a tapering down of federal aid to education. (Author/JM)