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November 20, 1981 - Image 6

Resource type:
The Michigan Daily, 1981-11-20

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Page 6-'Friday, November 20, 1981-The Michigan Daily

End to state recession forecast

,, .

Y .

The current Michigan recession will be
relatively short, lasting until the spring of next
year, but the short recession must not be viewed
as though it were the end of the state's long-term
economic dilemma, according to University
Although personal income in the state will
grow by 7.1 percent in 1982, real disposable in-
come will fall for the fourth year in a row, the
economists reported in a forecast presented at
the 29th annual Conference on the Economic.
Outlook yesterday.
THE LOCAL rate of inflation, at 10.1 percent,
will reduce the numerically increased income to
an actual decrease in earnings, the report stated.
"Total employment will increase by only 0.7
percent for 1982. . . a very significant slowdown
from the 2.6 percent rate of growth (in em-
ployment) posted for 1981," the forecast said.
"If the labor force grows by about 2 percent for
1982, the4ncrease in total employment will not be
sufficient to absorb all the additions to the labor
force and the unemployment rate will rise to an
average of 13.3 percent for 1982, more than a
percentage point higher than in 1981," the
economists said.
VIEWED IN terms of year-to-year changes,

the outlook for the state of Michigan appears to
be nothing but bleak, the report stated.
"The upcoming recovery, which should last at
least through 1983, must not be viewed as though
it were the end of our long-term problem in
Michigan," the economists said. The recovery
should be thought of as a breathing space which
will allow concerned parties, including workers,
employers, universtities, and state officials, to
rectify the inherent problems of the state, they
The economists-Joan Crary, Saul Hymans,
and Harold Shapiro-urged the parties to "inten-
sify their efforts to provide an environment
which will attract those economic activities
which will provide the necessary base for robust
growth in the years to come."
The state was already in a recession when the
national recession of 1980 began, the economists
said. As the national economy strengthened,
Michigan's did also. However, the period of
recovery within the state was all too brief, in-
deed, too short to regain the ground which- had
just been lost, they reported.
"It is clear that renewed weakness in the
automotive market along with the general
weakness of the national economy has once
again sent the State of Michigan into recession,"
the economists said.

... ,.

Q Where do you find one of the
U ' l ner research- -

DIRECTOR OF THE Institute for Social Research Thomas
Juster (left) and Saul Hymans, a University economics
professor, discuss the report Hymans presented to the 29th an-
nual Economic Outlook Conference held yesterday at Rackham


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Recession recovery
predicted for 1982

(Continued from Page 1)
tion - real GNP - to be only 1.1 per-
cent above the production level of 1981.
"With so small an increase in production
for the year ... we forecast an unem-
ployment rate averaging 8.4 percent for
the year," the report states.
Consumer prices in 1982 will rise 7.5
percent higher than they are now, com-
pared to a present level which is 8 per-
cent above last year's.
INFLATION likely will slow down as
the economy recovers in the next year
and a half, said Hymans, who delivered
the report to the conference. "The rate
of inflation declines over time," he
Without the Reagan tax cut, which
took effect Oct. 1, it would be harder to
get out of the recession, Hymans said in
response to audience questions. The





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tax cut only means that available in-
come of the taxpayer will remain con-
stant, rather than decreasing as it
otherwise would have, he added.
"We are forecasting a significant
recovery beginning in the spring of 1982
with substantial acceleration following
the 10 percent personal tax cuts in mid-
1982 and mid-1983," the report states,
Recent declines in residential
building activity likely will continue
through the first quarter of 1982
although the rate of decline will
diminish, the report predicted.
Natural recovery forces, including
strong underlying demand for housing
construction and autos, will lead the
recovery in the spring and the mid-year
personal tax cut will accelerate
economic improvement still further,
the report concludes.
GNP up;
still here
WASHINGTON (AP) - The nation's
economy grew rather than shrank this
summer, as first reported, the gover-
nment said yesterday. Nonetheless,
economists said they are more certain
than ever the nation has slipped into
Revising preliminary figures that
had indicated a downturn, the Com-
merce Department said in a new report
that inflation-adjusted gross national
product rose at an annual rate of 0.6
percent in the July-September quarter.
COMMERCE'S preliminary report
last month said 'real" GNP - the value
of all goods and services the nation
produces - had dropped at an annual
rate of 0.6 percent in the third quarter
after declining at a rate of 1.6 percent in
the spring quarter.
The transformation of a decline into a
gain was due almost entirely to a
buildup in inventories, a clearly
recessionary trend indicating that
producers and manufacturers were
having trouble selling their goods.
In other words, U.S. businesses were
still turning out new products and
materials in the July-September quar-
ter, and all that production counted in
the GNP total. But sales were already
slipping and have now slipped much
more, according to other government
If slow sales continue, as separate
reports indicate they will, companies
are bound to cut back production and
lay off workers - as many already are
doing - until their inventory stockpiles
Before adjustment for inflation,
the gross national product rose to an
annual rate of $2.96 trillion in the third
quarter, the new report said. Measured
in 1972 dollars, to discount for inflation,
GNP rose to a rate of $1.513 trillion.

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