With so much turmoil in key business sectors, trying to convince skeptics that the area's economy remains strong won't be easy. They point to a spate of business failures, layoffs and the takeover by federal authorities of a leading financial institution as clear evidence of a major downturn.

Indeed, some local executives insist that the Washington area is falling into a recession.

Granted, the entire country may be headed toward a recession, but there is no evidence yet that metropolitan Washington will be the first to experience it, notwithstanding the problems in some key sectors of the local economy.

Even as the dog days of summer continue to bring more bad news of foreclosures, depressed earnings and sales declines, the Metropolitan Washington Council of Governments (COG) assures us that the region's economy remains strong. The area is entering a period of slower, yet strong economic growth in the 1990s, COG recently concluded in a report on economic trends in metropolitan Washington. In a related interview, a COG official attributed recent difficulties of some firms to the current business cycle.

How could that be, you ask, when the landscape is littered with debris from the failure of a major retailer, the collapse of a leading bank company, widespread problems in the real estate industry and a slight increase in unemployment?

The rationale of COG forecasters -- generally supported by other informed observers of the local economy -- suggests that what we're seeing is a matter of bad timing. A slowdown was inevitable. Unfortunately, it is occurring when the chickens hatched in the booming 1980s are coming home to roost. The mistakes of the 1980s, along with the greed that permeated the decade, are combining to exacerbate the slowdown that had been forecast at least two years ago.

The vastly overbuilt real estate market epitomizes the get-rich-quick, free-wheeling mentality that governed questionable business decisions in the previous decade. With so much unoccupied commercial space on the market, building owners are finding it next to impossible to repay lenders, who financed them with few questions asked. Bank regulators, meanwhile, have called a halt to loose loan policies, making it more difficult for borrowers to obtain real estate loans.

The problems that have occurred in the wake of these changes are made to seem larger by the slowdown, but they are rooted in greed and mistakes.

Clearly, either of those factors, or both, contributed heavily to recent problems for a number of Washington-area companies. Garfinckel's and Washington Bancorp. are Exhibits A and B. Add the trainload of problem real estate loans at area banks to the list.

Notwithstanding drops in retail sales, new residential and commercial construction and federal procurement, overall economic indicators remained strong in the Washington area throughout 1989, according to the Council of Governments.

More than seven months have passed, but COG's assessment of the area's economy remains essentially unchanged: The rate of growth will be somewhat slower in comparison to the blistering pace of the 1980s, but the economy in metropolitan Washington will remain strong over the long term.

"We're not the Rust Belt and we certainly aren't Boston. But then we are not what we were in 1970, either," observed a COG official. "Our {earlier} forecasts showed that employment growth would peak between 1985 and 1990 and that there would be steady but lesser growth."

Virtually every forecast issued by economists and labor market experts has supported COG's projections all along. "I see things generally the way COG does," affirmed Richard Groner, director of the division of labor market information and research in the D.C. Department of Employment Services.

"I think the Washington economy will continue to be strong in the long run {but} in the short run I think a lot of businesses will go through a down cycle," he said.

That's precisely what we're seeing, although some executives apparently view the business cycle as much more seriously than the situation described by COG and others who follow the economy closely.

A slight increase in the jobless rate last month will no doubt provide more ammunition for skeptics who have been shaken by the unprecedented problems this summer in banking, retailing and real estate. But while job growth is slowing, unemployment hasn't increased that much, Groner points out. Indeed, unemployment in the area is a mere 3.3 percent.

Of far more importance for the area's economy, it seems, is the continuing decline in the labor force, which grew by only 5,000 in June. "While things are slowing, we still have a tight labor market," Groner said. "The reason we have a tight labor market is that the labor force isn't growing. As a matter of fact, the labor force is declining."

The labor force in metropolitan Washington declined by more than 31,000 persons in the 12-month period that ended in June. It's easy to see why Groner would say, "The issue through the rest of the '90s will still be the labor supply."

Between 1985 and 1989, the number of jobs in the region increased by 16 percent, while population grew by only 12 percent. This trend, in which jobs are growing faster than households, will continue well into the future, according to COG.

So it's not a question of the underlying strength of the local economy that should concern officials. The Council of Governments makes a strong argument in asserting that the economy remains strong. It's the dwindling labor force that warrants attention in the long run.