Recession watchdog has a dream: to build a smoother, predictable economy


New York - All the way home to Connecticut, as passengers around him are nodding off, Geoffrey H. Moore stays wide awake, pondering the question that has plagued his sleep for 50 years: Is the economy forever doomed to bounce up and down and lurch sideways like a New York City subway car?

His conclusion: Probably. But that doesn't mean the bumps in business cycles such as the one he thinks ended in March 1991 can't be smoothed and made less painful, said Mr. Moore, 78, director of Columbia University's Center for International Business Cycle Research.

You read it right -- March 1991. That's when he thinks the 1990 recession ended, even though he concedes that for most people, it still feels like recession.

His opinion is important because Mr. Moore, one of the world's most respected business-cycle theoreticians, is a key member of the seven-member Dating Committee of the National Bureau of Economic Research, the non-profit group tabbed by the government 60 years ago to be the official arbiter of recessions.

It was the research bureau that said the recession of 1990 started in July of that year, a month before Iraq's President Saddam Hussein sent his legions into Kuwait. And it is the Dating Committee that will meet, probably in August, to declare officially that the 1990 slump ended in spring 1991.

Mr. Moore's vote now would be March, 14 months ago. Others have picked April or May of 1991, although many private economists say the slump didn't end until January 1992.

The argument may seem academic, but it takes on added significance in this election year, when the economy is creeping ahead as slowly as an overloaded train climbing a hill.

Because most people will interpret the National Bureau of Economic Research's announcement that the recession is over as a declaration that better times are ahead, it could well boost President Bush's popularity, which has been plummeting.

The Dating Committee's meeting will beheld after the government announces on July 30 how the economy performed in the second quarter. It is expected to grow, perhaps a tad faster than the first quarter's 2.4 percent growth rate.

What all this means is that business conditions are improving. But Mr. Moore believes they're looking up more than most other experts think.

"I think we're likely to see a 3 percent growth rate through the rest of the year," Mr. Moore said recently as he sat in his tidy, cramped office on the Columbia campus. "All my leading indexes seem to be saying that."

Mr. Moore hasn't just been obsessed with business cycles for the last half century. He also has concentrated his efforts on finding ways to keep the economy on a more even path.

Unfortunately, he has concluded, booms and busts are inherent in capitalism -- one causes the other. But if government and business policy-makers can somehow be tipped off in advance that trouble lies ahead, he said, it might be possible to make slumps less painful.

Mr. Moore gained fame as chief architect of the Index of Leading Economic Indicators, the government's main forecasting tool since 1950.

For years, the index was a winner. But recently, its record has been more comparable with that of the Columbia football team, which has gone 1-9 for three straight seasons.

Mr. Moore claims to know what's wrong with the index and has suggested that its components be changed to reflect changes in the economy. The U.S. Bureau of Economic Analysis turned him down. But, undaunted, Mr. Moore has devised a slew of new indicators that he claims work better than the index ever did.

Money talks, however, even in Ivy League ivory towers, so the non-profit Center for International Business Cycle Research finances its research by selling Mr. Moore's daily, weekly and monthly forecasts to businesses and governments worldwide.

Right now, his "long-leading index," designed to predict business conditions 10 to 12 months ahead, is signaling growth, but weak growth, for early next year. His "short-leading index," however, sees strong growth in the next few months. And his "leading inflation index" says consumer prices are on their way back up again -- but not way up.

Essentially, all of the indexes are based on the premise that the economy is so big it can't stop on a dime or zoom ahead from a dead stop any more than a train can.

But trends can be detected, he said, and detecting trends, even after they've started, can help policy-makers decide when to jump on a moving economy or leap off before a crash.

All of Mr. Moore's indicators say flat out that most other economists are wrong, not only because they are predicting TC 1992 growth of about 2 percent, but because many are worried that weak economic conditions in Japan, Germany and other U.S. trading partners could bring the U.S. economy to a halt.

According to Mr. Moore, who also computes indexes for Japan, Britain, Canada, Australia and a number of Asian nations, business conditions are picking up globally, which should help U.S. exporters.

Most other U.S. economists are in a tizzy that Japan's economy could fall further.

All of this doesn't mean that Mr. Moore, a former Bureau of Labor Statistics commissioner, is gung-ho about economic prospects. He said 3 percent growth beats 2 percent but that it's nothing to crow about.

"It isn't going to get the unemployment rate down very much," he said.

He expects unemployment, which peaked at 7.3 percent in February and stands now at 7.2 percent, to fall only slightly this year. But his expectations are rosier than the consensus of his peers. A survey of 44 experts by the National Association of Business Economists found that most expect a 2 percent growth rate this year.

But even if Mr. Moore is right, growth is likely to be the slowest of any post-recession period since the Korean War, and far below the average post-slump growth rate of close to 6 percent.

Thus, when the National Bureau of Economic Research announces that the recession ended more than a year ago, "it's going to come as quite a surprise to most Americans," said Paul Getman an economist with Regional Financial Associates. "It's like saying the sky is pink. You can say it ended, but if it doesn't reflect reality, what good is it?"

Mr. Moore doesn't agree.

Technically, the economy has been creeping ahead since the second quarter of 1991. The main measure of economic output -- gross domestic product -- declined at a 3.9 percent annual rate in the fourth quarter of 1990 and 2.5 percent in the first three months of 1991. But GDP grew 1.4 percent in 1991's second quarter, 1.8 percent in the third and 0.4 percent in the fourth.

So even though the economy slowed to a crawl late last year, Mr. Moore said, he's sticking to his guns that the recession ended in March 1991.

To Bank South Corp. analyst Phillip M. Larkins, it's more like a bounce.

"I don't think we had a recovery at all in 1991," he said. "It was a statistical mirage. The evidence suggests we entered recovery in January of this year."

The bottom line, Mr. Larkins said, is that the coming declaration from the bureau won't signal "you'll be able to return to your lifestyle in the '80s. You're going to have to rethink your spending habits and your lifestyle habits, because it's a different ballgame."

But not for Mr. Moore. Even at 78, he spends three hours a day commuting to work by train, not because he needs the money, but because his passion is his quest for a smoother economy.

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