ECONOMISTS SAY UNITED STATES IN SLOWDOWN, NOT A RECESSION

Economists see some signs of a slowing economy in the United States.

Manufacturers have cut production to trim unwanted excess inventory the Fed has lowered interest rates -- twice in January -- and the manufacture of cardboard boxes is down.

"But we're looking at the economy as a slowdown not a recession," said Gary R. Thayer, vice president and manager of economic research at A.G. Edward's Investments in St. Louis.

"There are some favorable El winds in the nation's economy " said Thayer Friday during the annual Economic Outlook Conference held at Glenn Auditorium on Southeast Missouri State University campus.

"2001 will be a challenging year," he said.

Thayer and Bruce Domazlicky of the Center for Economic & Business Research at the university were speakers at the annual conference.

As A.G. Edwards' chief economist, Thayer uses a number of quantitative analysis to forecast economic growth and stock market activity.

"We were not surprised to see a cooling off of the economy " said Thayer. "There were some telltale signs. But there are some good things happening out there too."

The economy remains weak as manufacturers cut production but consumer spending recovered after the weather turned more seasonable in January, said Thayer.

Refinancing bodes well

"The current wave of mortgage refinancing bodes well for the economy," he said.

Thayer credits two cuts in interest rates for the surge.

"The Fed may cut short-term interest one or two more times " said Thayer. "Aggressive Federal Reserve interest rate cuts and the chances for a tax cut have improved the economic prospects for the second half of this year and the early part of next year."

If the economy were in a deep recession and lenders were unwilling to refinance mortgages, then the economy might have a difficult time of improving.

Domazlicky said the regional scene mirrors the nations.

Signs of a slowing economy are evident in Southeast Missouri, said Domazlicky. "But the area continues to participate in a strong economy. Unemployment is low, personal income growth remains strong and retails sales are brisk."

Domazlicky said that the area could continue moderate growth and that unemployment would probably remain low over the long haul.

"We could see an increase in some unemployment rates in the summer but that they would probably decline again by the end of the year," he said.

Thayer said the economic slowdown appears to be more of an inventory cycle than a full-blown recession. If consumer spending remains weak manufacturers might have to cut production dramatically in order to bring supplies back in line with weak demand. Fortunately consumers have started spending again, especially in the auto industry. "The sharp downturn in manufacturing may be brief " he said.

Car sales dropped during the severe weather in November and December.

"It's no fun to shop for a car when you have to trudge through snow and ice," said Thayer. As the weather turned more seasonable January car and truck sales have rebounded to their highest rate in more than three months, he said.

"We haven't had a recession in 10 years " said Thayer. "And we've had only two recessions over the past 18 years."