'Soft-Landing' Engineers

ECONOMIC forecasting has a reputation for accuracy that is only somewhat better than astrology or tarot card reading.

It's unfair, of course. But then, those who often must predict bad news are rarely treated warmly. Forecasting is a complex "science," weighing any number of economic indicators from any of several philosophical points of view. Throw in the "X factor" - how the media interpret the forecasts and numbers, and how the public responds to those reports - and you have some idea how tricky it can be to see the path ahead.

The latest US economic figures to be ground through the numbers mill, announced June 13, showed more softening of the economy. They are likely to be interpreted as another nudge toward the likelihood of a "hard landing" (full-blown recession), rather than the less-painful "soft landing" that Federal Reserve Board chairman Alan Greenspan and others have been trying to engineer.

Retail sales in the United States rose in May. (That's good.) But only 0.2 percent, less than predicted. (That's bad.) Consumer prices rose 0.3 percent, slowing from April's 0.4 percent. That's a sign that inflation isn't heating up and is good news if you're among those, like some within the Clinton administration and in Congress, who would like the Fed to lower interest rates at its next meeting in July to stimulate the economy.

The White House isn't supposed to try to influence the actions of the independent Fed. But chief of staff Leon Panetta walked right up to the line on a televised interview show June 11 by saying that "it would be nice to get whatever kind of cooperation [from the Fed] we can get to get this economy going." At the least, Mr. Panetta's comment will encourage those outside the White House who agree with him to carry on the lobbying.

Should the Fed fail to follow through, and the economy nose dive, the comment also begins to distance the White House from Fed policy. George Bush tried to blame the Fed for the economic slump during his last months in office. The voters, however, didn't buy it.

They probably won't buy it from the Clinton White House, either. But if you're Panetta and you see dark clouds in the crystal balls of economic forecasters, you begin to cast about quickly for partners to help shoulder the blame.