WASHINGTON - Interest rates probably will not go up much as the economy continues to expand moderately in 1994, according to the latest quarterly survey of the National Association of Business Economists.
The survey of 46 business economists, which was released yesterday, calls for real gross domestic product to advance 2.8% next year on continued strength in consumer spending, housing and business fixed investment.
That kind of growth probably won't stir up any inflationary pressures, the economists said. They predicted that consumer prices will rise about 3.1% next year, virtually unchanged from 3.0% this year. The GDP deflator, another measure of inflation, is expected to climb 2.8% after a 2.6% gain this year.
The economists forecast that the yield on the Treasury 30-year bond will rise slightly, to 6.5% by September, which would not be much of a change from the recent high of 6.3%. The rate on 90-day Treasury bills, which was quoted at 3.1% last week, is expected to go up to 3.6% by the end of next year.
The median forecast for the long bond yield in 1994 is only 6.2%, little changed from the current yield of around 6.25% and considerably more optimistic than the 6.8% estimate issued in August.
William Dunkelberg, president of the association and chief economist of the National Federation of Independent Business, told reporters that the analysts surveyed do not see much movement in rates because they are more confident that inflation will not flare up and that growth will remain mild.
The economists also said they are optimistic about rates because of the Fed's accommodative monetary policy and President Clinton's deficit reduction program, although many were skeptical that the budget cuts would materialize.
Real GDP will rise 3.3% in the fourth quarter, the best performance all year, the economists predicted. But they estimated that growth will slow to 2.8% in the first three quarters of 1994 as consumers cut back from their current buying spree.