Spring begins this week, and all those economists predicting robust economic growth for 1986 are hoping that more than crocuses and daffodils will be blooming soon. So far the economy is not.
Financial markets in the United States and many other industrial countries are expressing their confidence in a rosy future, with stock indices hitting new highs and falling interest rates giving bond owners big capital gains.
Nevertheless, current economic statistics are describing a lackluster present for the United States and raising new questions about how soon the promised faster growth will arrive.
The optimists point to three developments that should give the economy a boost this year:
*The big drop in long-term interest rates and surging prices for common stocks, which together are sharply cutting the cost of capital for businesses.
*Plunging oil prices.
*The decline in the value of the U.S. dollar on foreign exchange markets.
Lower interest rates already are helping housing and should encourage more business investment, these economists argue. Falling oil prices reduce energy costs for businesses and households, leaving them with more money to spend on other things. And the lower value of the dollar should discourage imports and help build markets for American goods abroad, they say.
"With those things coming along, I don't see how we can avoid having a good year for economic growth," said economist Lyle Gramley of the Mortgage Bankers Association.
But like spring and its flowers, the 4-percent-or-higher growth rates commonly predicted are still more prospect than reality.
"The current data depict an economy that is extraordinarily lackluster," said economist Alan Greenspan of Townsend-Greenspan & Co. "But it is an economy whose financial markets are projecting a . . . very different outlook. If it were not for the very large decline in the cost of capital, there would be no reason to expect any acceleration" in economic growth.
Statistics released so far covering January and February suggest a slow economic expansion, even if some of the more negative numbers -- such as the 0.6 percent drop in industrial production in February reported Friday -- are somewhat discounted because of severe weather in some parts of the country.
"The February employment data are consistent with an economy which is growing faster than it did through most of 1985, but which has not yet shifted into high gear," Greenspan told his clients last week. "Both income and final demand data indicate that a pickup . . . is necessary to reach 4 percent growth for the first quarter."
Federal Reserve Governor Wayne Angell has the same view. "Until we see evidence to the contrary, we have to accept that our economy is growing at somewhere between an annual rate of 2.0 and 2.5 percent," he said last week.
Part of the problem is that all three of those major positive forces at work produce their stimulative effects only after lengthy lags. In the short run, the negative impact of falling oil prices on the oil and gas industry may be greater than the positive impact elsewhere from lower energy costs, according to Angell and some other analysts.
The Fed official, who assumed his post last month, said the near-term impact on oil and gas producers is more pronounced than the long-run increase in consumer purchasing power.
Sam Nakagama of Nakagama & Wallace, a New York economic consulting firm, agreed. "Contrary to the popular view, we believe that the current plunge in petroleum prices constitutes another 'oil shock' and will tend to depress economic growth all around the world over the short run.
"Why so?" he asked. "The reason is that a drop in oil prices is not analogous to a tax cut -- as most economists seem to believe -- but is more like a transfer payment. It is a transfer from oil producers to oil consumers.
"Viewing the world as a closed trading system, a drop in prices means that oil producers -- whether an individual firm or a nation -- must immediately cut their spending at least as much as their incomes decline" or else borrow to make up the difference, Nakagama said.
Certainly that immediate effect has emerged in recent statistics. Mining output in the United States fell 3 percent in February, primarily reflecting "drastically curtailed oil- and gas-well drilling activity," the Federal Reserve said in its report on industrial production.
According to its survey of payroll employment in February, the number of jobs in oil and gas extraction dropped from 603,000 in December to 585,000 in February. And the Oil and Gas Journal estimated recently that oil company capital spending will total less than $34 billion this year, down almost one-fourth from last year's level.
However, Greenspan estimated that the cutbacks in capital spending by the industry, which may be significant enough to reduce total business investment by 1 1/2 percent or more this year, have only begun to affect the data.
Meanwhile, the big drop in oil prices -- some crude oil last was were fetching about $13 per 42-gallon barrel, less than half the level of a few months ago -- helped push down the producer price indices for finished, intermediate and crude goods. The index for finished goods fell 1.6 percent, the largest decline since the index first was calculated in 1947.
But oil was not the whole story on producer prices. There was virtually no sign of pressure on prices either from an acceleration in economic growth or from rising prices for imported goods.
For instance, prices for finished goods other than foods and energy were unchanged between November and February on a seasonally adjusted basis. Intermediate-materials prices, similarly excluding foods and energy, were down slightly in the last three months.
Often, prices of some materials that are traded in sensitive auction markets give early indications of any acceleration of economic growth. There are few indications of this in the latest reports.
The latest trade figures, which are a month older, are gloomy, too. The merchandise trade deficit was a record $16.5 billion in January, a sign that imported goods still are displacing domestic production in supplying goods to American businesses and households.
According to Greenspan, the January deficit was so large that the first-quarter deficit is going to be greater than that of the fourth quarter even if rising import prices produced an improvement during February and March.
At the same time, American consumers were not yet rushing out to spend any of the new wealth being generated in the stock and bond markets or the capital gains being realized by the wave of home refinancings following the decline in mortgage interest rates.
Overall retail sales fell 0.1 percent in February following a 0.2 percent decline in January.
Part of the small February decline was due to falling gasoline prices. However, sales in some other sectors, such as for automobiles, were also not strong. Despite some continuing low-interest-rate financing incentives, new-car sales have been running below expected levels for some manufacturers.
"There is nothing in the new data that has come as a surprise," Greenspan said. "Everything is on track for very modest growth . . . Aside from home building, you can't find any sign of faster economic growth . Orders for goods are okay but not terrific.
"I would expect to see capital appropriations by business move in the spring," he continued. "If that has not happened by July, we would be dealing with something that was quite new. It would mean that balance-sheet problems of debt-burdened businesses made translation of the lower cost of capital into higher capital spending uncertain. It's premature to make that judgment now.
Lyle Gramley regards the latest statistics as "puzzling" and somewhat unsettling. However, he still expects the gross national product to increase by about 3 1/2 percent between the fourth quarter of 1985 and the fourth quarter of this year, after adjustment for inflation.
"I would be worried about conditions getting boomy except for a few developments," said Gramley, who, as a member of the Federal Reserve Board until last summer, often took a relatively conservative, anti-inflation position on monetary policy.
Gramley said he expects the economy to be restrained by coming reductions in federal budget deficits, with a "very, very substantial" deceleration in real government spending in 1987.
At the same time, the drop in interest rates, oil prices and the value of the dollar likely will produce less of a response in the private sector than might have been the case in the past, Gramley estimated. The response of business investment will be less because of the cuts in spending by oil companies and because large amounts of vacant office space are reducing construction plans.
And because consumer spending has been rising much faster than personal incomes -- so that consumer debt has risen sharply -- Gramley expects a dampened spending response to the increased wealth flowing from financial markets and to lower interest rates on personal loans and other consumer credit.
Gramley now forecasts that real output will rise at about a 3 percent rate in the first half of 1986 and about 4 percent in the second half. "But I have to tell you," he said after digesting last week's numbers, "this is a weaker set of nonfinancial statistics than I had expected."
Or as Angell put it, "What I am suggesting is that there are reasonable grounds for doubt that our economy is going to launch out of this 2 to 2 1/2 percent growth path into a 4 to 4 1/2, 5 percent growth path."