It's not just the liberal politicians and the special-interest groups that are worried about the Federal Reserve and high interest rates any more.
After a year-long battle to head off inflation by relentlessly raising interest rates, the Fed now has a growing minority of mainstream economists concerned that it has gone too far and may be tipping the country toward recession.
"It isn't only the homebuilders association and the unions now -- I'm wondering, too, whether there was really any need to raise interest rates this week," said Bill Cheney, chief economist for John Hancock Financial Services.
Mr. Cheney and increasing numbers of other economists believe the six interest rate increases the Fed engineered in 1994 probably already were sufficient to head off inflation, and that the seventh, on Wednesday, was unnecessary and possibly risky.
They have begun to warn that the danger of overtightening -- and pushing the country into recession -- is now greater than any danger that inflation might get out of control.
For Maryland, the question of whether the Fed might overdo its fight against inflation is especially critical.
"Maryland is seriously lagging the nation and is not yet anywhere near back to its pre-recession employment levels, so the last thing it needs is another recession before it even fully recovers from the last one," said Charles W. McMillion, president of MBG Information Services, a Washington consultancy that tracks the state's economy.
The Fed's battle to keep the post-recession recovery from bursting into out-of-control inflation will be one year old tomorrow.
With its action Wednesday, the Fed has raised the key federal funds rate, which banks charge each other for overnight loans, to 6 percent, from 3 percent a year ago today. But some economists have begun to ask whether the Fed is fighting an inflation threat that doesn't exist.
"According to the conventional models of the economy that the Fed uses, inflation should have been accelerating by the fourth quarter of 1994," Mr. Cheney said.
"But it didn't, and it still hasn't, and when the economy refuses to perform the way the model suggests, it isn't the economy you should wonder about, it's the model," he said.
What the conventional model misses is the intense global competition that makes it almost impossible for companies to raise prices or for workers to demand raises, Mr. Cheney said. "That competitive pressure is working back through the production process all the way into the labor market.
"People are worried about keeping their jobs, not about demanding pay raises. When was the last time anybody went on strike for higher wages?" he said.
Because labor accounts for 70 percent of the cost of manufactured goods, and an even higher percentage of many services, many economists argue that inflation is unlikely to get out of control so long as there is little pressure for higher wages.
The current expansion differs not only from the conventional model but also from recent periods of rampant inflation that have been burned into the consciousness of central bankers, some economists believe.
"The Fed quite rightly does not want to be called to account for allowing any repetition of the kind of double-digit inflation we saw in the 1970s, but conditions today bear no resemblance to those times," said Michael A. Conte, director of regional economic studies at the University of Baltimore.
Oil-price and food-price shocks caused the inflation of the 1970s, and "the supply-side picture has nothing on the horizon to suggest we face that kind of problem today," Mr. Conte said.
The slowly growing chorus of mainstream economists who fear that the Fed is flirting with a recession does not yet count up to a majority. More typical is David Donabedian, chief economist for Mercantile Bank Corp. "I don't think they've gone too far -- yet," he said. "Growth in 1995 certainly will be slower than in 1994, but that's not the same as a recession."
"Real short-term interest rates, if you factor out inflation, are about 3 percent as of Wednesday's action, and that's right on the average of the last 15 to 20 years, so it doesn't indicate to me that monetary policy is extremely tight," he said.