A majority of the nation's forecasters are insisting that the current recession will end by August, basing their optimism on past recessions. But by their own acknowledgment, the forecasters are playing down the features of this recession that could prove them wrong.
The big rise in stock prices in recent weeks has reinforced the forecasters' view that this recession, the ninth since World War II, will be among the shortest, lasting less than a year.
Blue Chip Economic Indicators, which polls 50 prominent forecasters each month, says that their consensus prediction in February was for healthy economic growth beginning in the third quarter, assuming that the Persian Gulf war ends by April 1.
"People are behaving as if there is something objective out there making the Dow Jones industrial average go up, but it's just animal spirits," said Paul Samuelson, the Nobel laureate in economics. "The forecasters are taking the average length of the four mildest recessions since World War II and assigning it to this recession."
Though the consensus forecast has had an uncanny knack for predicting the beginning of past recoveries, Mr. Samuelson and other economists contend that the end of this recession is harder than others to forecast because it departs radically from the norm in three main features: the huge quantities of unpaid bank loans, the resulting crisis for the nation's banks and the cutback in lending.
Economists say they do not know whether the lending cutback stems mainly from the reluctance of banks to lend and risk more problem loans or from the reluctance of consumers and businesses to borrow and spend during hard times. Whatever the dynamics, the economy cannot move from recession to recovery without a revival of lending and the increased spending that loans make possible.
But some economists argue that even if interest rates get low enough to revive lending, the recession still might not end this summer, or even this year.
They cite such problems as the weak real estate and construction markets, a sharp decline in consumer spending in recent weeks, and the growing budget deficit, which makes the government unwilling to spend for public works and other projects that stimulate economic activity.