Shortly after Iraq invaded Kuwait on Aug. 2, executives at Air Products & Chemicals Inc. huddled at their headquarters in Allentown, Pa., to try to figure out what it would mean for the company's $3 billion business in industrial gases and chemicals. There were no ready answers.

When you don't know which way to jump, there is a great tendency to stand still, and that seems to have been the response of Air Products and many other American companies while they wait for the explosive drama to unfold in the Middle East.

"So far, we haven't done too much," Duncan Meldrum, economics manager for Air Products, said last week. "We are taking a very close look at our budgets, but we have made no changes in the way we do business. A few projects may slide a bit, but we haven't done anything drastic."

This "wait-and-see" attitude was expressed last week by economists from a number of major companies attending a conference in Washington and appears to be in tune with the current condition of the national economy, which is still creeping ahead despite a sharp slowdown in the Northeast and sluggish growth in several other regions, including this area's economy, which is suffering from a steep fall in the real estate market and cutbacks in defense spending. Nationally, the willingness of companies to bide their time while the Persian Gulf crisis unfolds is good news for the U.S. economy, because it means the full impact of $40-a-barrel oil will be felt slowly. Moreover, the impact ultimately could turn out to be small if oil prices come down again within a few months, as a number of the economists expect.

In the short run, the patience on the part of business nationally means that the likelihood that surging oil prices could plunge the U.S. economy into a serious recession is much smaller than it otherwise would be. While a recession could be in the cards, it does not appear that business cutbacks in spending will help bring one on soon, according to many of the economists who gathered here last week for the annual meeting of the National Association of Business Economists (NABE), Meldrum among them.

Meldrum and his counterparts eagerly buttonholed each other to find out how their respective companies were reacting and how the economic future had changed.

"An awful lot of people are waiting to see what happens," Meldrum reported. "They are not being aggressive about expanding right now, but I get the impression most American businesses are taking a long view -- as long as Wall Street lets us" -- and making few changes in their long-term plans.

"Everybody is nervous right now," said Richard C. O'Brien, corporate economist for Hewlett-Packard Co., a major electronics manufacturer, "but new orders are still coming in."

The biggest unknown about the short-term outlook, a number of economists said, is the extent to which higher oil prices and rising uncertainty about the outlook will cause consumers to zip up their wallets. Even there, according to economists from the retailing sector, the news is not as bad as some had expected, given the sharp drop in consumer confidence over the past two months. Auto sales, for instance, have held up better than many of the economists had expected.

With only a few exceptions, such as in the lumber industry, which has been hard hit by a big drop in construction, the economists at the NABE meeting said that, industry by industry, they do not expect soaring oil prices or high interest rates to cause their employers' businesses to decline.

Pain, but No Gain

But if declining sales aren't expected, neither are big gains. And in some industries, such as electronics, which has been suffering from weak sales for more than a year, the spreading economic effects of higher oil prices could delay an expected rebound.

Despite the pockets of real trouble, as in lumber, and continued softness elsewhere, the consensus expressed by the economists seemed to add up to an extended period of very slow growth for the American economy, perhaps with a downtick in production in one quarter or another, that would stretch well into next year.

Interestingly, economists from many of the major industries that usually take it on the chin when the U.S. economy gets soft or declines, including steel, aluminum, autos and heavy equipment manufacturers, do not think that will happen to their industries this time.

The expectation that the economy will remain flat rather than decline, even though the oil price shock came about when it was already essentially dead in the water, can be traced to two key points, one fact, the other prediction.

The fact, cited time and again by the economists last week, is that there are virtually no excess inventories anywhere in the economy. And the prediction is that business investment plans will not be affected in a major way because that spending is being driven primarily by the need to modernize to remain competitive in an open world economy.

For example, both of those factors were behind economist Bernard Lashinsky's assertion that the U.S. steel industry does not face hard times, as it often has in past periods of economic weakness. Lashinsky, chief economist for corporate planning at Inland Steel Industries, told an NABE session that shipments of steel this year ought to match 1989's 84 million tons. Some other steel economists complained his figures were too conservative, that the industry will beat last year's total with a strong fourth quarter.

Furthermore, Lashinsky expects 1991 to be at least as good as this year for steel. He believes that some markets, such as autos, will not drop much below their current production levels, while steel's industrial markets remain healthy. Some industries, such as paper, autos and textiles, are completing major investment programs, he said, but other industries are cranking them up, including public utilities and oil.

"This is happenstance," Lashinsky explained. "Usually everyone invests at once, and they go bust together. This time it hasn't happened that way." And that is a plus for steel.

The steel economist also pointed to the sales results at a recent machine tool show in Chicago, that industry's biggest annual exposition. "It was a resounding success," he declared. "A lot of sales were made."

Heavies in Demand

David Vance, chief economist of Caterpillar Tractor Co., likewise was relatively optimistic about the demand for heavy equipment. This year has not been so hot, but, he said, "There will be a big kick in exports next year for our industry. ... We are not looking for a deep recession in heavy equipment."

Any decline will be very mild, similar to what the industry experienced in 1986, "nothing like 1981-82," Vance said. By the middle of next year, a rebound should be underway, he predicted.

As for Caterpillar, Vance said it is in the midst of a $2 billion investment program, which has not been cut back because of any uncertainty caused by the invasion. It is a long-term commitment that "will be in place by the end of next year," he said. "We will really see results from it in 1992 and 1993."

The chemical industry, meanwhile, is moving on a cycle all its own, according to Jeffrey A. Shapiro, chief economist for ARCO Chemical Co. Massive worldwide investment programs are underway that will add large amounts of production capacity in coming years. For instance, U.S. capacity to make two basic organic chemicals, ethylene and propylene, which are used in a wide range of products, will rise 8 percent in 1991 with more plants coming on stream the following two years.

All the added capacity, coupled with the expected economic slowdown, will hold down profits. "This investment cycle will be severe," he declared. But it is likely to be this investment cycle rather than any U.S. business cycle that will determine the chemical industry health in the next couple of years.

Another strong investment sector that is not likely to be affected by a short-term economic decline, even should one occur across the country, is communications.

Constantine Soras, chief economist for Nynex Corp., which provides local telephone service in New York and all of New England except Connecticut, said his company has not been hurt by the sagging regional economy, probably the weakest in the nation. Nynex's large capital budget has not been trimmed because it faces a constant need to modernize its facilities and incorporate new technology. "Unless we have a severe recession, I think we will not see much of a change," Soras said.

However, Soras and Thomas F. Davis, corporate economist for Motorola Inc., were among the economists who believe the oil price shock will be enough to produce an economic decline to add up to a recession.

Davis said most of the major industry customers for electronic components -- autos, consumer electronics, computers, communications equipment and industrial equipment -- all are weak. "I am not optimistic that any of these markets will improve anytime in the next five or six months" because of the Middle East situation.

"Two months ago, I thought we were at the trough. Now I don't think so," he declared. Nevertheless, industry shipments likely will be rising again before long because "inventories are low. I do not know any part of the electronics industry in which inventories have not improved in the past couple of years," he said.

Hewlett-Packard's O'Brien was more optimistic than Davis, in part, he said because investment in computers has hit bottom and will soon be turning up.

Lumber Sales Wooden

While there was disagreement even among industry experts about the immediate prospects for the electronics industry, there was none about the lumber part of the forest products industry.

Lynn O. Michaelis, chief economist for Weyerhaeuser Co., said the recession-like levels of activity in new housing and commercial building construction have soured the lumber business. "Our market really hit the wall back in April and May," he said.

Though Weyerhaeuser's lumber business is off, its pulp and paper production has held up well, Michaelis said. Export sales from both parts of the company have also remained healthy. "Some of the economies in our export markets are slowing, but we haven't seen it yet" in our sales, he added.

Shortly before last week's meeting, the NABE conducted its usual quarterly survey of a group of its members who do detailed economic forecasts. The survey's results broadly reflected the industry-by-industry picture painted by those at the sessions here.

Yes, most of the 71 respondents agreed, the oil shock has hurt the prospects for economic growth, trimming the likely increase in inflation-adjusted gross national product from 2.1 percent to 1.1 percent this year and from 2.5 percent to 1.9 percent in 1991.

The price shock also boosted the chances of a recession in the next 12 months to about 50-50. But most of the economists are not predicting one. The outlook for their own industries are stronger than that.