More and more signs indicate that the long-expected slowdown of the economy is under way. But that complicates the outlook for interest rates.

Some economists expect the cooling of business conditions to drive market rates lower by the end of the year. Others, pointing to strength in consumer spending, still expect the Federal Reserve to raise rates first.

This week will bring a surfeit of new data on the economy, including personal income, new home and automobile sales, the leading economic indicators, and the national purchasing managers survey.

The biggest day will be Friday, when the government's labor market and unemployment survey for September are due to be released. The financial markets have awaited them nervously each month since last winter.

If the number of nonfarm payroll positions created is lower than 150,000, the Fed's decision last week not to raise rates will look clairvoyant. If it is higher than 190,000, the pressure on the central bank to take anti-inflationary action will build again.

"We expect September payroll employment to be up 140,000, far below the year-to-date trend,"said Bruce Steinberg, manager of macroeconomic research at Merrill Lynch & Co. "Economic data are increasingly consistent with my view that bond yields can decline between now and yearend."

The data also point to earnings problems for companies sensitive to economic shifts. Durable- goods orders dropped 3.1% in August, it was reported last week, more than reversing a 1.4% gain in July. The decline was broad-based, Mr. Steinberg noted.

Also last week, initial unemployment claims reported for the week ended Sept. 21 rose 11,000, to 340,000.

It is unclear how that will affect the national unemployment rate, which is to be announced Friday. The 5.1% rate in August stirred market fears that full employment would spur inflation.

Mr. Steinberg expects wages to edge up by just 0.2% and the September consumer price index to rise by the same amount, leaving core inflation at a 30-year low.

"Interest rates will increasingly reflect the weakening expansion and dearth of inflation," said David A. Levy of the Levy Institute at Bard College. He expects a 30-year bond yield of 6.25% by yearend, down from 7.05% now.

Short- and long-term rates will drop further in the first half of next year, he thinks, with the government bond rate returning to the 6% level of last winter.

Other economists believe economic growth is ebbing, but they don't think an increase in rates can be avoided.

"The slowdown is not fast enough to dispel concerns about wage inflation," according to Sung Won Sohn, economist at Norwest Corp.

Consumers, as always, are the key, according to A. Gary Shilling, an economist and money manager. Record debt gives consumers a reason to retrench, Mr. Shilling said. But he thinks they might stage yet another buying binge.

"My judgment is that sometime within the next several quarters, consumer spending will revive to the point that the economy will grow faster than the Fed will tolerate. The resulting rise in interest rates could well precipitate a recession in 1997," Mr. Shilling said.

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