The possible collapse of the congressional budget process this week seemed of little immediate concern on Wall Street or in the board rooms of big business.

Should Congress fail to pass a meaningful deficit reduction package, U.S. Steel Corp. plans to go right ahead with the installation of continuous casters at its Gary, Ind., and Fairfield, Ala., plants.

Investors with money tied up in stocks for retirement and their children's education will stay with their portfolios managed by Merrill Lynch or whomever.

Instead of ending with a bang if the budget process breaks down, the economic recovery probably will erode slowly, with companies slowly cutting back investments and workers eventually losing jobs, according to a sampling of economists, investors and heads of major corporations.

Last week, House and Senate budget negotiators reached an impasse in their attempts to agree on more than $50 billion in spending reductions for fiscal 1986. Congressional conferees said they will try to reach agreement again this week, but the outlook for a settlement was not encouraging.

"It's more a question of, can we keep as many people in plants employed next year as this year, than it is how many plants will we buy and own," said David Munro, general director of macroeconomics and international economics at General Motors Corp.

As an example, Munro used GM's plans for a new mid-sized Pontiac in 1987. "It was something that looked a little expensive," Munro said. If Congress failed to make a dent in the deficit, it would lead to higher interest rates and a softer car market. GM would kill plans for the new Pontiac and stay with the one it already had, Munro said.

Although most of the danger of the deficits is in the long run, some of the most immediate responses to a failure to reduce the deficit would be a rise in interest rates, a decline in the dollar and minor changes in future investment plans.

In the short run, however, the degree of the effect on the economy depends on what the financial markets expected to get from Congress.

Many economists said that little will happen in the short run because Wall Street never believed Congress would cut the budget by as much as its promised $50 billion. Investors were acting under the assumption that very little, if anything, would happen.

"There's been a fairly deep-seated skepticism in the financial markets" that was reflected "to some extent in the market prices of bonds and stocks," said economist Alan Greenspan.

"The general assumption as I read it. . . was they'd reach an agreement, but a lot of it would be mirrors and dubious estimates and instead of the $56 billion cut, it likely would be half of that," Greenspan said. Congress won't act unless an immediate crisis is at hand, he said.

"To the average household, the average constituent of the average congressman, it's an abstract concept with no effect on the household budget," Greenspan said. "It's only when you get evidence that the federal deficit is pushing interest rates higher, or creating problems for the economy, for jobs or affecting the average person, it's only then that it appears that there's a reasonable chance for action."

The financial markets believe Congress will only make real cuts of about $15 billion to $20 billion, Greenspan said.

However, William V. Sullivan, a senior vice president of Dean Witter Reynolds Inc., said that Wall Street would be diasppointed if the budget deficit is reduced by less than $56 billion. "There's the risk of a very sharp selloff in bonds" meaning higher interest rates, if the reductions are less than the promised amount, Sullivan said.

Failure to get significant budget cuts in this round "will tend to push rates higher," said William N. Griggs, part owner of Griggs and Santow financial analysts in New York. "The deficit reduction package is going to push rates higher because the market assumes we were going to get it. The failure to get it will tend to put pressure on interest rates."

Rates are likely to rise because of the expectation that the U.S. Treasury will continue to borrow large sums of money to pay the deficit, increasing the competition for funds. Economists said they expect the rate rise to be concentrated in long-term rates, which would affect mortgage rates and corporate borrowing expenses.

"You're more apt to have higher capital market rates, and that could be a blockage to capital investment," Sullivan said.

High interest rates are also blamed in part for the high value of the dollar, which has made exports relatively expensive to foreign goods and has been blamed for the lackluster performance of U.S. agricultural sales overseas this year. It also tends to increase sales of relatively cheaper foreign manufactured goods, helping to erode more than 220,000 factory jobs since January and creating record U.S. trade deficits.

Economists, however, differ over the effect the failure to cut the deficit would have on the dollar. Some economists say that higher interest rates would keep up the demand for dollars and keep the dollar strong, although the prospect of $200 billion deficits for years to come could weaken the dollar because foreign investors could lose confidence in the U.S. economy.

"The budget picture has always worried the foreign exchange markets," said Griggs. "It seems to represent to the foreign exchange markets a failure to deal with our problems. This confidence in us is always at risk."

"Bad policy weakens the dollar no matter what the interest rate environment is," said Dean Witter's Sullivan. "I think the failure of Congress to come to grips with the fiscal policy problem is bad policy."

However, if the dollar's value falls as foreign investors lose confidence, it would provide a boost for exports of U.S. manufactured goods and agricultural products, which would then become relatively cheaper in world markets within 18 months to two years, economists said.

Economists also said that with failure to reduce the deficit, that fiscal stimulus to the economy would keep the recovery going. However, they worried that with the new aggressive easing of monetary constraints by the Federal Reserve Board in conjunction with a loose fiscal policy, inflation could reaccelerate.

"It may mean we get the worst of all possible worlds," said David Jones, chief economist for Aubrey G. Lanston in New York. Jones said without substantial movement on the deficit, he expects inflation to rise from about a 3 percent rate this year to 5 percent by the second half of next year.

Even if inflation doesn't pick up, foreign investors may believe that it will, causing them to pull out of U.S. assets, which would then have a lower return on their investment, forcing companies and the government to drive interest rates up to keep attracting funds.

Also worrisome to investors is the triple whammy of the domestic deficit, the trade deficit and uncertainty about how the tax reform plan would affect their businesses, investors said.

"The biggest problem at the moment is uncertainty over the budget deficit, the trade deficit and tax reform," said Robert C. Wilkins, senior vice president for finance at Bethlehem Steel. Those three problems "have held up minor projects, but not those things that are key to our business or key to our long-term strategy. Nothing of great consequence was held up."

"The important news is if you combine the breakdown in budget negotiations with questions about the president's effectiveness and hints that Federal Reserve Board Chairman Paul A. Volcker's anti-inflation discipline is gone, when you combine all of these things, foreign investors get concerned," said David Jones, chief economist for Aubrey G. Lanston in New York.

Some major pension fund and other institutional investors said they will do little that is different. "When we invest, we stay fully invested at all times in equities, and we just buy the cheapest securities we can find without making a forecast that under a budget impasse these securities will do well and others will not," said Dean leBaron of Batterymarch Financial Corp. in Boston.

Although economists worry that higher interest rates would cool plans for business investment, corporate officials said that despite the high rates some important and large projects would have to go ahead anyway.

So far, Bethlehem Steel plans to go ahead with its major capital projects, although some minor ones will be postponed, said Robert C. Wilkins, senior vice president for finance.

"The company spends annually between $250 million and $400 million," Wilkins said. "It's more a question of how quickly some of these things might come forward." Authorization of new projects is "not at the same tempo" as if the deficit were being reduced and the company didn't worry about the trade deficits and tax reform, Wilkins said.

At General Motors, major projects that have been planned years in advance will be continued, Munro said. But calculations of the effects of continued $200 billion deficits would be included in forecasts of the economy's future output and what that means for the automobile market, Munro said. He said GM wouldn't scale back production plants 1 percent every time its forecast for economic growth is scaled back 1 percent.

"But if you were at the margin on something, by moving back forecasts of gross national product we would decide to cancel that," Munro said. "I don't think in fact a failure in one year" in the deficit reduction effort "would have an effect on investment plans. But it would dampen expectations in the next year or two for the economy and production planning."