The director of the Congressional Budget Office told Congress yesterday her agency is revising its forecast to show a "less optimistic" outlook than it did last January, but declined to provide any specific figures.
In a memo to members of the House and Senate budget committees, Alice M. Rivlin asserted her agency has "not completed" its mid-year economic forecast, and "therefore, has not communicated it to members of Congress."
Sources yesterday confirmed a Washington Post report last Sunday that CBO had prepared a new preliminary forecast showing a recession beginning late this year and extending through most of 1980, with inflation continuing high.
The figures attributed to CBO showed the economy's growth rate would slow to 1.3 percent in 1980, with inflation at 10.1 percent this year and 8.3 percent in 1980 and the jobless rate rising to an average 6.9 percent in 1980.
However, Rivlin asserted the CBO is not predicting that the unemployment rate will rise to a peak of 7.5 percent. She also said CBO has not prepared any forecast that predicts three successive quarters in which output actually declined, as the Post also reported.
The statement came as, separately, Robert Russell, the deputy director of the administration's Council on Wage and Price Stability, warned that if the current guidelines fail, a recession could result.
Russell told a food industry conference that "the situation today looks distressingly like the 1973-74 experience," when the U.S. underwent its deepest and most prolonged recession since the late 1930s.
In her statement yesterday, Rivlin conceded that CBO forecast actually showed a maximum unemployment rate of closer to 7 percent than 7.5 percent, and output declining for two quarters rather than three.
Congressional sources also denied that key lawmakers were given an advance look at the specific CBO forecast before passage of the first congressional budget resolution last May 23.
Rivlin cited as reasons for CBO's more pessimistic forecast "the impact of the worldwide oil shortage, the rapid acceleration of inflation and the weakness in consumer spending."
Officials declined to say yesterday how the preliminary forecast could show the jobless rate rising to a 6.9 percent average for 1980 without climbing to a substantially higher peak. However, some analysts confirmed it could be possible.
Nevertheless, the CBO predictions of a 1.3 percent growth rate in 1980 and an average jobless rate of 6.9 percent would constitute a full-fledged recession. The forecast is consistent with that of leading private economists.
The 10.1 percent inflation rate the forecast projected for this year compared to an 8.4 percent rate presumed in the May 23 congressional budget resolution. That measure also assumed a growth rate in 1980 of 2.1 percent.