The economy keeps flashing signs of strength, but several veteran economists feel that business conditions are fragile and lower interest rates lie ahead.

"The economy is poised between slow growth and recession - not between slow growth and rapid growth," said A. Gary Shilling, an economist and investment adviser.

Consumers' high debt loads dictate slow growth in consumer spending, which makes up two-thirds of economic activity, he said.

Mr. Shilling noted that, adjusted for leasing, debt-to-income and debt- service ratios "are higher than at the end of the debt-fueled 1980s expansion."

Moreover, he said, "they are significantly higher than just a year ago, when a bounce-back in consumer spending pulled the economy back from the brink."

Economists David A. Levy and S. Jay Levy, in their Industry Forecast newsletter, stress that the economic outlook is not improved from two months ago, when rates were falling and the markets feared recession.

"Deteriorating household balance sheets and falling consumer spending rates, fading construction growth, sluggish business equipment outlays, and a halt to the narrowing of the trade gap will compress profit margins and retard the economy over the months ahead," they wrote.

Recent price slumps in the bond market "reflect a serious misreading of the economy and the extent to which present-day speculation and leverage can amplify market moves," they said.

The economists, who publish their newsletter from the Jerome Levy Economics Institute at Bard College, Annandale, N.Y., noted several reasons for "false strength" in the consumer sector.

"Tax refunds on 1995 returns are heavily skewed toward the early part of the year relative to recent years, temporarily boosting spendable incomes," they said.

"Retail sales have been strong because tax refunds are running well ahead of last year and because people receiving the early refunds are disproportionately low-income individuals who tend to turn cash flow into spending faster than the average consumer," they noted.

As the notion of a firming economy gives way to renewed fears of recession and fading worries about inflation, the Levys predict, the yield on the benchmark 30-year Treasury bond "will plunge, hitting 5.5% this year."

Meanwhile, the 90-day Treasury bill rate "will fall to 4.5% and to 2% if a recession occurs," they predicted.

Mr. Shilling, who heads his own firm, A. Gary Shilling & Co., Springfield, N.J., noted another major difference from 1995.

"Mortgage rates were falling a year ago, setting off a refinancing boom that freed up cash for consumer spending," he said. "The backup in rates this year has ended that boom with a vengeance."

Mr. Shilling also noted that, historically, periods of slow economic growth are transitional. "With rapid growth ruled out, the most likely outcome is a slide into recession some time in the next year," he said.

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