The current economic downturn will be "shorter and milder" than the eight previous recessions that have occurred since the end of World War II, Congress's chief economist predicted yesterday.
The gross national product, the nation's output of goods and services, will begin to grow again in the second quarter of this year, Robert D. Reischauer, director of the nonpartisan Congressional Budget Office, told the Senate Budget Committee.
As previously reported, the CBO estimates that the GNP shrank by 2.6 percent in the fourth quarter of 1990 and will decline in the current three-month period by 1.7 percent. The Bush administration's Office of Management and Budget projects a GNP decline of 3.4 percent in the fourth quarter of last year and 1.3 percent in the current quarter.
Overall, the Congressional Budget Office envisions the economy growing by 1.3 percent between the fourth quarter of 1990 and the fourth quarter of 1991. The OMB predicts 0.9 percent growth for the same period.
The projections by the two agencies that the economy will contract for two consecutive quarters allows lawmakers to abandon the spending limits set by last fall's budget agreement for both the current fiscal year and the spending year that ends Sept. 30, 1992.
Senate and House leaders in both parties oppose scrapping the limits. Such a move would be "counterproductive," said Senate Budget Committee Chairman Jim Sasser (D-Tenn.). "It would . . . tell the American people that we simply are not serious about reducing the deficit."
"The budget agreement should not be discarded so quickly," said Rep. Willis D. Gradison Jr. (Ohio), the House Budget Committee's ranking GOP member.
Reischauer warned that financial markets could react badly "if, after biting the fiscal discipline bullet last fall, Congress spits it out three or four months later."