The economy has emerged from recession and there is little chance it will tumble into another downturn any time soon, the National Association for Business Economics said Monday.
The professional forecasters said the threat that the recovery could fizzle is fading, but there are still plenty of things to worry about, ranging from Enron-induced caution among executives at big companies to a large overhang of consumer and corporate debt.
Of the 334 NABE analysts responding to a March survey, 76 percent put the possibility that the country could suffer a double-dip recession this year at less than 50-50.
"The economic recovery is under way and the foothold is pretty strong," NABE president Harvey Rosenblum said.
The Federal Reserve got rave reviews from the economists for its aggressive interest rate cuts in response to the Sept. 11 terrorist attacks, which an overwhelming 78 percent endorsed as proper.
Far fewer panelists believed that fiscal policy _ tax cuts and government spending _ had been handled successfully by Congress or the administration. Over half of the survey respondents rated the performance of Congress as "poor" or "somewhat poor" while one-third had a similarly jaundiced view of the Bush administration's economic response to Sept. 11.
Deadlock between Congress and the administration over the shape of an economic stimulus package prevented passage of any measure until earlier this month.
The economists saw the overhang of corporate and consumer debt as the biggest danger facing the economy with 23 percent of the economists citing it as a major economic danger, up from 16 percent in the last NABE policy survey last August.
Rosenblum said economists are also worried that the country's biggest companies could hold back the recovery over concerns about such factors as the collapse of energy giant Enron Corp., which in December became the largest corporate bankruptcy in U.S. history.
He said the accounting troubles exposed by Enron, which are the subject of congressional and criminal investigations, along with continued pressure on corporate profits and stock prices, had made chief executives at many big companies cautious.
"I think 2002 is going to be a tale of two economies with larger companies probably expanding less than the smaller companies," said Rosenblum, who is director of research for the Federal Reserve's Dallas regional bank.
He said small companies, who don't have to worry about riling Wall Street with a bad earnings report, will likely push forward with plans to hire more workers and boost capital spending.
"Most CEOs of publicly traded companies know that the next time they have to amend their earnings statements, it may mean the end of their tenure," Rosenblum said. "CEOs of larger companies are living next to this cliff which makes them much more cautious."
Rosenblum said many big firms are doing everything they can to boost profits, even if that means slowing company growth or laying off employees to bolster the bottom line.
He said that will act as a drag on the economy and translate into a "jobless" recovery in the early stages even with smaller companies stepping up their hiring.
This caution among executives at big companies is one of the reasons that NABE analysts are expecting the rebound from the recession to be more subdued this year, with economic growth of about 4 percent, compared with the 6 to 7 percent growth normally recorded in the first 12 months of a recovery.
Rosenblum said he personally believed that the recession probably ended in December, although the group that dates the U.S. business cycle, the National Bureau of Economic Research, is months away from making its own formal determination.
The National Bureau of Economic Research ruled in November that the downturn, which ended a record 10 years of uninterrupted growth, began in March 2001.
While the GDP did contract at an annual rate of 1.3 percent in the July-September quarter, it resumed growing at a surprisingly strong 1.4 percent rate in the October-December quarter, even though the country was still dealing with the shock of Sept. 11 and disruptions from the anthrax mail scare.