DALLAS - Business economists, in a survey released yesterday, said by a 2-to-1 margin that they expect Gov. Bill Clinton to beat President Bush in the November election.
The forecast by the members of the National Association of Business Economists came as the group released its latest survey, which also calls for a mild rebound in the economy in 1993 accompanied by higher short-term and long-term interest rates.
Two-thirds, or 66.7%, of the 243 members on the group's policy panel said they expect the Democratic governor from Arkansas to beat President Bush, a sharp reversal from four years ago when by a margin of 53% to 37% members predicted Mr. Bush would beat Democratic candidate Michael Dukakis.
At the same time, Mr. Bush remained the group's favorite as the better candidate in terms of economic policy. Nearly 60% of those surveyed said the president's economic proposals "would be better for maintaining stable growth and moderate inflation in the years ahead." That is virtually unchanged from the 61% favoring Mr. Bush four years ago.
"We believe that under a President Clinton we will experience higher inflation, higher interest rates, and higher budget deficits," Kathleen Cooper, chief economist for Exxon Corp., told the group in a speech. "It seems very realistic to expect the bond market to go through a temporary sell-off." It will take time for Mr. Clinton and his advisers to take a tougher stand on fiscal policy and reassure the market, she added.
The political pressures on both candidates to step up economic growth do not augur well for the market, Richard Rippe, senior vice president and chief economist for Prudential Securities Inc., also said in a speech to the group. "I think it's clear the candidates know there are no votes in the bond market. All the votes come from stronger growth and job creation. "
The economic forecast of the business economists, prepared by a panel of 47 members, predicts annual growth averaging 2.7% in 1993. That would be a mild pickup from this year's estimated growth of 1.8%.
The economists said they expected to see a mild rise in inflation, with the gross domestic product deflator going up to 3% in 1993 from 2.7% this year. They forecast that rates on three-month Treasury bills will rise to 3.9%, and 30-year bonds will be up to 7.8%.
Earlier rate projections put out by the group in a press release were much higher and had to be corrected after they ran on financial wires.
Separately, Michael Boskin, chairman of the president's council of economic advisers, told the group in a luncheon speech yesterday that he does not intend to serve a second term if President Bush is reelected. Later, Mr. Boskin told reporters, "It's nothing to do with current events. I just have other commitments."
He did not elaborate, other than to say that President Bush had already asked him to stay on. Mr. Boskin is currently on leave from Stanford University, where he is a professor of economics. In other comments, Mr. Boskin praised Germany's central bank for cutting short-term interest rates and said the action should help the U.S. economy and exports.
The high German rates, which have put pressure on the dollar in foreign exchange markets, have been a concern of U.S. officials "for some time," Mr. Boskin said. High European rates have made it difficult for other European countries with weak economies to adjust their monetary policies, he added.
Mr. Boskin did not comment directly on the business economists' forecast that Gov. Clinton will win the election, but he did take some pokes at the Democratic challenger's economic policies. He said Mr. Clinton's support for higher mileage standards would raise costs for the auto industry and for consumers, and he repeated the administration's argument that Mr. Clinton's policies would raise taxes and federal spending.
Still, Mr. Boskin conceded that the economy is growing too slowly. He stressed that many of the problems are long-term ones such as high debt levels, defense cutbacks, and tight credit practices by banks.
With low interest rates and low inflation, the stage is being set for a period of long-term growth as the economy's many structural problems are resolved, said Mr. Boskin.