Economists Predict Recovery in July

Despite recent statistic that point to a deepening recession. President Reagan's tax cuts will boost the economy, economists from Harvard and MIT predicted yesterday.

At the same time, they cautioned that the cuts may saddle the economy with dangerously high deficits in the long run Reagan's projected 1983-84 deficit is $91.5 million.

Government economists estimated last week that the gross national product declined in February at an annual rate of 45 percent.

The 45 percent decline matches the October-December drop for real gross national product the broadcast measure of national economic activity and marks the third negative quarter in the past tour.

Economics professors yesterday attributed that drop to high interest rates Robert Solow '44, an MIT professor and chairman of the Federal Reserve Bank of Boston, also attributed the decline to the Federal Reserve Board's tight monetary policy.

'Strong Stimulus'

But Reagan tax cuts, which take effect July I. will provide a "strong fiscal stimulus and spur on economic recovery. James S Duesenbeury. Mater Professor of Money and Banking, said yesterday.

The reductions are part of a three year package including 10 percent annual income tax cuts during the last two years.

There is a "better than even chance" fore recovery before the summer, said MIT economist Paul A. Samuelson But he added that any recovery would be weak because high interest rates will discourage investment.

Samuelson also expressed concern that the efforts of the Administration and the Federal Reserve Board to keep inflation down is taking its toll on jobs, production, real income growth and the stock market.

"The Federal Reserve Board in general, and Paul A. volcker, its chairman, see the Federal Reserve as the only anti-inflation game in town," Samuelson said.

Nothing that Reagan's July I package amounts to a $40-billion fiscal stimulus--toughly 13 percent of the gross national product--Otto Eckstein, Warburg Professor of Economics, said. "If this doesn't work, we're in deep trouble."

Deficit Woes

Reagan's tax cuts will expand consumption, but large government deficits will offset any major economic expansion, said MIT economist Franco Modigliani.

The Administration's supply-side polices are a "tarce." Modigliant said, adding. "The large tax reduction is for the rich nobody else will get much."

No Cure Yet

Benjamin Friedman '66, professor of Economics, said last month's economic decline "reflects the inadequacies of the president's programs."

Most of Congress currently disagrees with Reagan's proposed tax cuts for 1983-84, said Friedman, adding. "This fiscal issue is non-partisan. The Republicans and Democrats have put forward almost identical proposals."

Waves

"The President is on a different wave-length than everyone else," he added.