Noted economist optimistic about economy in '93 Sustained growth to stay, Sinai says

December 10, 1992|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- When supereconomist Allen Sinai went to ren the remake of "Cape Fear" from his nearby video rental store, he discovered he'd have to wait three months to see the blockbuster movie. But rather than getting angry, Mr. Sinai realized that he'd hit on another of his patented colorful examples of what is happening to the U.S. economy.

"People are spending less and saving more. Rather than go out to a movie, they're making popcorn and sitting at home," Mr. Sinai said yesterday at his 10th annual economic forecast, which has become a fixture on the economic calendar.

And, as always, there's more to one of Mr. Sinai's stories than a mere economic homily. Like the main character in Cape Fear, who had the letters "L-O-V-E" tattooed on one hand's knuckles and "H-A-T-E" on the other's, he said, the U.S. economy is a battleground of love and hate, light and darkness.

Fortunately, love and light are winning, the 53-year-old economist told an anxious crowd of 100 in a posh midtown Manhattan hotel.

"I thought I would never get optimistic again. Maybe I'm just a product of New England, with its cloudy, crummy weather," said Mr. Sinai, who is chief economist with the Boston Company of Economic Advisors, a subsidiary of Shearson Lehman Brothers Inc.

While Mr. Sinai is optimistic about next year, he is not overjoyed. The economy will grow by about 2.5 3 percent next year, he said. This would be an improvement over this year's growth rate of 2 percent, but wouldn't be the robust rate that many would like.

Unemployment is also likely to stay stubbornly stuck at around 7 percent, he said, with the economy needing a good year or 18 months of steady 3 percent growth before the number of jobless falls appreciably.

But next year should see inflation stay at or under 3 percent and the stock market rocket up to a new high of 3,900. This is by far the boldest prediction by any economist on the Dow, which closed yesterday at 3,323.81 points.

Such plain and lively talk is not unusual from Mr. Sinai, who has become one of America's most-cited economic gurus by his direct delivery and accuracy. When he was just in his early 40s, for example, he made a name by anticipating the 1982 recession and the following pickup, as well as the 1987 stock market crash, the 1990 recession and the slowness of the current recovery.

He has also worked at high-profile jobs, being a chief forecaster at Data Resources Inc. from 1971 to 1983 before joining Lehman Brothers Kuhn Loeb Inc. in 1983. At the Boston Company, he uses his economic models to interpret new data on the economy to provide immediate forecasts for clients.

An adroit media handler, Mr. Sinai regularly faxes his speeches and thoughts to journalists. And his willingness to return reporters' telephone calls means that he is quoted virtually everyday in newspapers and on radio and television.

This has its drawbacks, however, because people tend to remember what he has said. His 1983 prediction, for example, that the 1980s recovery would be uneven turned out to be overly cautious.

The current state of the world economy has also made it easier to be sober, with Mr. Sinai's economic model showing just 0.7 percent growth in Europe next year and 1 percent growth in Asia. Such weak overseas economies could be a drag on U.S. exports, widen the trade deficit and slow the pickup, he said.

Nevertheless, the economy has turned the corner, Mr. Sinai said, unable to resist one more Sinai-esque statement: "The sun always rises -- not just in Japan, but also here, although less so on the East Coast."

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