Loyola economist expects healthy growth this year

January 08, 1992|By David Conn

A key economic indicator shows the nation's economy should grow by 2 percent to 3 percent this year, according to a Loyola College economist, but a survey of area business leaders reveals less optimism about the growth of the mid-Atlantic region's economy.

The strongest sign that the national economy will grow at a healthy pace this year is the 2.5 percentage-point spread between short- and long-term interest rates, according to Mark Meador, whose report appears in the January 1992 "Executive Business Outlook," a twice-a-year publication of Loyola's business school.

The fact that long-term rates are substantially higher than short-term rates means investors believe real economic growth will accelerate and that short-term rates will soon rise.

The so-called "yield spread" has predicted economic expansion after the recessions of 1970, 1974, 1980 and 1981, according to Mr. Meador, an economist at Loyola's Joseph A. Sellinger S. J. School of Business and Management.

But surveys of area business leaders and Loyola graduate business students show widespread pessimism is among the factors that will be a drag on the region's economy, making its recovery slower than that of the nation, the Loyola outlook says.

"So far, I haven't seen a real indication that the present downturn is behind us," said Frank P. Bramble, president and chief executive officer of MNC Financial Inc.

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