The Reagan administration's economic forecast for 1988 is likely to be reduced bv a full percentage point, due to declines in consumer and business spending following the October stock market plunge, according to Beryl W. Sprinkel, chairman of the president's Council of Economic Advisers.

The administration's formal reestimate of inflation-adjusted growth in the gross national product, fourth quarter 1987 to the same period in 1988, will be completed by the end of December, Sprinkel said.

A reduction of 1 percentage point would put the estimate for real GNP growth for 1988 at 2.5 percent.

But Sprinkel warned that a recession could not be ruled out.

"I think the growth-rate estimate will come down. But the $64 question is, will it come down enough to bring a recession? We're quite hopeful it will not, and we feel confident it will not," provided the government follows the right mix of economic policies, he said.

"If we do that, then I think the chances of avoiding a recession are very good, but not 100 percent."

A recent survey, in the wake of the stock market decline, showed that private forecasters have cut their expectations for 1988 GNP growth by about 1 percentage point, which Sprinkel said was a reasonable "ballpark" estimate.

The policy that Sprinkel said should be followed to avert a recession calls for the executive department, Congress and the Federal Reserve to be aware of the errors that led to the Depression that followed the 1929 stock market crash, and to do things differently. Monetary policy at that time, he said, "got tighter and tighter. I don't think that's going to happen {now}.

"Then, in 1930, we adopted a very protectionist trade bill, and if there is a silver lining {to the stock market crash}, then maybe the drop in the market has made {pending} trade legislation a little less certain than before. In any event, the president will veto it."

Sprinkel also said that another fatal mistake leading to the Great Depression of the 1930s was that "they kept raising marginal tax rates, and that's not going to happen {now} either."

"It's very important that we continue a moderately expansive monetary policy, that we make some progress in getting the {budget} deficit down, and that we keep our markets open," he said.

Despite his statement that the administration would not accept higher tax rates as part of the effort to bring the budget deficit down, Sprinkel acknowledged that "there certainly will be some revenue increases" in the package now being negotiated by the administration and Congress.

Sprinkel viewed the drop in the September trade deficit announced yesterday with moderate optimism, but warned that a solid reversal in trade prospects has not yet arrived.

"The numbers were slightly better than the market was anticipating. But I don't think that there's solid evidence yet that it {the deficit} is adjusting in money terms. I'd like to see {declining numbers} for more than one month," he said.

He noted that with the dollar declining about 7 percent to 8 percent since the Oct. 19 stock market plunge, the prices of imported goods should continue to go up, raising the prospects for new increases in the trade deficits as measured in dollars, even though the volume of the deficit is declining.

Meanwhile, a senior administration official said that the Federal Reserve's decision to pump more cash into the banking system to relieve the strains from the stock market's plunge is supported by the administration, which -- like the Fed -- is giving top priority to avoiding a recession.

But the official also said that "there are definite limits" to the Fed's ability to keep financial markets awash with cash and credit.

"We definitely have to keep that in mind, because the last thing any of us want, including the president, is to leave a legacy of massive inflation," the official said.

Some observers have detected some tension between Treasury Secretary James A. Baker III's public prodding of the Fed to boost the money supply, and the institutional fear at the Fed of reigniting inflation by keeping such a policy too long.

There is no evidence to suggest that Federal Reserve Chairman Alan Greenspan is ready to reverse the current easy money trend, the official said. Nor is it clear that the time for reversal has arrived, the official said. "We just have to keep it in mind."