Washington. An acrimonious dispute over budget priorities between President Clinton and Republican leaders of Congress last week shuttered segments of the federal government and threatened to disrupt servicing of the public debt. "It just adds to the worry list for consumers," said Gary L. Ciminero, capital markets economist at Fleet Financial Group, Providence, R.I. "Free-floating anxiety about what it means could make people more reluctant to spend and give us a blue Christmas, or at least a gray one, after three very merry ones in a row on the credit card," he said. Banking industry analysts Jarius DeWalt and Linda Stromberg of M.R. Beal & Co. warned of "the unsettling psychological impact this take-no-prisoners battle is having on the consumer, 60% of our nation's gross domestic product." The analysts said that "over the next six to 10 weeks, the calculus of assigning blame for any impasse and the threat of (Treasury debt) default represents the most serious risk overhanging the economy." Treasury Secretary Robert E. Rubin averted a default last week by drawing on federal retirement funds to pay the interest due on borrowings. The government cannot issue new debt, or refinance old debt, without new authority from Congress, which Republicans refuse unless Mr. Clinton meets their conditions. Of course, the Federal Reserve could divert attention from the crisis and bolster confidence by lowering interest rates, but most economists, including Mr. Ciminero, doubt the central bank will do so. Whether or not it should is a matter of debate. "The Fed must avoid an accomodative monetary stance specifically designed to offset any anticipated fiscal restraint," according to Mickey D. Levy, chief financial economist of NationsBank Capital Markets Inc. Doing so would be "misguided and dangerous" and "confuse the macroeconomic debate," he said in a recent presentation to the Shadow Open Market Committee, an economic study group that monitors the central bank. Perhaps the Fed agrees. Last Wednesday its monetary policy committee, led by Chairman Alan Greenspan, met as scheduled and left rates unchanged. As has been its custom in recent months, the group gave no explanation for its decision. "A wait-and-see attitude prevails at the Fed," said Sung Won Sohn, chief economist at Norwest Corp. "Chairman Greenspan wants to stay out of the budget debate." But some observers worry that the Fed, for the sake of appearances, may wait too long to ease credit in the face of economic weakness that may not be related to the budget debate. "Alan Greenspan's plan to hold a cut in the federal funds rate target hostage to budget deficit reduction legislation is backfiring, thereby harming the real economy," asserted Bert Ely, a Washington financial consultant and Fed watcher. "There are growing signs that the economy is slowing more than is necessary to achieve the long-sought soft landing," Mr. Ely said. Mr. Ciminero thinks the economy actually grew more slowly than the reported 4.2% rate in the third quarter. The fourth quarter, he believes, is poking along at a rate of less than 2%. But he puts the chances of a Fed rate cut during the remainder of this year at no better than 50%, owing in large part to the Washington budget wrangle. Next year, the Fleet economist expects real economic growth to resume a moderate pace of 2% to 2.5% while consumer price inflation also remains low, staying close to its 2.75% pace of the past two years.

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