Jimmy Carter hasn't had much luck of late but some readers of statistical tea leaves find a startling rebound from recession in process, on the eve of the Democratic national convention.
Washington economist Michael K. Evans said last week, for example, that "just as the economy collapsed in record time in April, it is showing amazing fast recuperative powers."
Evans, in the latest monthly forecast for his D.C.-based firm, Evans Economics, agreed that real gross national product is really sinking. He said it will fall 4.5 percent this quarter because of inventory accumulations that are being sold off and the continued impact of declines in order for goods an in new housing unit starts.
But, for the fourth quarter, Evans predicted a 1.4 percent GNP gain. Looking into next year, Evans also forecast a modest 3.5 percent increase in consumption but a substantial economic turnabout: Led by an investment boom, GNP will rise 3.6 percent in the first six months of 1981 followed by a 5.6 percent gain for the next six months.
A sharp increase of 2 1/2 percent between May and June of the leading economic indicators, reported by the government last week but forecast correctly by Evans a month ago, is the clearest sign to date that the worst of the recession is over.
But many had economic symptoms are likely to stay with us, even if the recovery indeed has started, because we have not found a socially acceptable formula for confronting inflation. "With unit labor costs rising 9 percent in 1981 and 1982, and with food, energy and housing prices all rising in excess of that, it is extremely unlikely that single-digit inflation will occur anytime during the next two years," Evans said.
Among the key forecasts made by Evans last week:
Unemployment will peak at 8 1/2 percent near the end of 1980 and employment will begin growing again in the current quarter.
Inflation, as measured by the Consumer Price Index, will climb at an annual rate of 10.3 percent this quarter, 12 percent in the fourth quarter and 11.3 percent for all of 1981. Drought this year will boost food prices into 1981.
Interst rates are expected to move somewhat higher again in the fourth quarter of this year, with the prime interest rate of banks to top corporate customers peaking at 12 1/2 percent before moving slightly lower in 1981.