IT IS PROBABLE, but not yet certain, that the United States is in a recession.
Recent statistics show that the real gross national product dropped at an annual rate of four-tenths of 1 percent in the July-September quarter. Last week, primarily because of a jump in auto sales, the Federal Reserve Board revised its figures upward, showing a slight rise for the third quarter.
But the basic trend in the overall economy right now can be described as wiggling around zero.
A consensus forecast of 50 leading economists calls for real GNP to decline again in the current quarter as well as in the first quarter of 1991, which would technically make it a recession.
But the consensus predicts recovery will start in the second quarter of 1991 and pick up gradually as the year wears on.
There is still some chance, however, that we can pull ourselves out of the current morass. Most important, the Fed is likely to bring down interest rates once a budget agreement between the administration and Congress is set.
The Fed is worried about a credit crunch that could dump the economy into recession and crack its financial structure.
Fed chairman Alan Greenspan recently said the fed has been closely watching interest rates and other indicators to determine if the pulling back of commercial banks to less lax lending standards is creating a tightening in credit markets, and he concluded that a tightening "of modest dimensions may be occurring."
Since then, the danger to borrowers and banks alike has increased. As James J. O'Leary, economic consultant to the U.S. Trust Co. of New York, puts it, "Many commercial banks and life insurance companies, including many large ones, are seriously undercapitalized, raising the risk of insolvencies as large loan losses continue."
Strapped for reserves, and nervous about nonperforming loans, many banks are turning down borrowers who once would have been considered creditworthy.
A tightening of private credit has the same impact on the economy as a tightening by the Fed, as Greenspan has made clear.
To prevent the system from seizing up, and falling, many businesses say, the Fed should make more reserves available and bring down interest rates.
After the lending binge of the 1980s, restoring stricter lending standards is necessary and healthy. But the Fed is worrying about signs that the banking system is contracting more than it should and endangering the economy. With demand deposits and time and savings deposits slowing, a more decisive move toward easing up by the Fed may be needed to prevent a worsening credit crunch that would chop into the nation's money supply.
The gulf crisis and the surge in oil prices has stirred both recessionary and inflationary fears, too.
But higher oil prices have also spurred spending in the United States for oil drilling and production. And, assuming no further increases in oil prices, the prospects of recovery in 1991 will be strengthened.
The biggest risk to this forecast of sluggish growth or moderate recession through the rest of this year and early next year, followed by a gradual recovery, is the threat of a financial crisis that would result if several major banks went under.
But it is unlikely that the Fed, Congress and the administration would permit that to happen. A more likely outcome is rescues and mergers of the threatened institutions.
Another big risk is an outflow of foreign capital. Yutaka Yamaguchi, the chief representative of the Bank of Japan, said recently that he was worried about "external shocks that could have a negative impact" on America's corporations and financial institutions. He said he agreed with the Federal Reserve's policy, which he called "very cautious." Too sharp a fall in U.S. interest rates, while foreign rates are rising, could increase the flow of capital out of the United States.
This must be the best-advertised, most carefully watched financial contraction ever. That in itself may help to keep it from becoming an economic catastrophe like the one in the early 1930s.