Economists See Strong Second Half For U.S. Economy In '99

Gordon Richards, economist at the National Assn. of Manufacturers, Washington, D.C., and Bruce Steinberg, chief economist at Merrill Lynch & Co., New York, disagree on why the U.S. Commerce Dept. has revised downward second-quarter 1999 GDP growth to 1.8% from 2.3%. June's record U.S. trade deficit is the reason, says Steinberg. Richards ties it "in large part [to] a one-time inventory run-off." But both foresee a strong U.S. economy during this year's final six months. Richards is forecasting 3.5% to 4% inflation-adjusted growth in GDP. Steinberg preliminarily puts third-quarter GDP growth at a 4% to 5% rate and fourth quarter at 3.5% to 4%. Neither mentions the possibility, but such strong growth could cause the Federal Reserve's Federal Open Market Committee to take a hard look at raising short-term interest rates again during its Oct. 5, Nov. 16, or Dec. 21 meetings.