BankAmerica: Structural Changes Are Keeping Recovery Sluggish

SAN FRANCISCO -- Long-term structural adjustments in the U.S. economy are preventing a stronger recovery, according to John O. Wilson, chief economist at Bank of America.

Major changes in basic industries are reducing income growth and consumer confidence, Mr. Wilson said. He described the changes as a transition from excesses of the 1980s to a more balanced, pro-growth environment for the 1990s.

No Quick Rebound

Recovery will be "long and ardously slow," wrote Mr. Wilson, a senior vice president of the bank, in the November issue of the bank's Economic & Business Outlook.

The recession is thought to have bottomed out last spring. In the first four quarters of recovery, annualized real growth in gross national product will probably average 1.6%, Mr. Wilson said. Real growth rates after the past seven recoveries averaged 5.2%.

The real rate of growth in the 1990s, forecast at 2.4%, would come primarily from productive investment and increases in labor productivity, Mr. Wilson said. Consumer prices are expected to increase at an average annual rate of 3.7% from 1992 through 1999, he said.

"The extent to which the U.S. economy will expand in the future," Mr. Wilson said, "will be largely determined by policies regarding investment -- in education, research, and development, more modern business plant and equipment, and infrastructure such as transportation, communications systems, and public utilities."

With the labor force changing and consumer confidence teetering, the resiliency of the U.S. economy will depend largely on a "return of confidence to the white-collar workers," he added.

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