California’s economy should be healthy in 1988,...

California’s economy should be healthy in 1988, but could join the nation in a recession by mid-1989, Lynn Reaser, senior economist for First Interstate Bank, said at a news conference. “Our best guess is 1988 should be a fairly good year for the economy,” Reaser said. But, she cautioned, inflation is expected to hit 6% by the end of 1988, causing the Federal Reserve to tighten monetary policy. “As a result, we expect the economy to be pushed into a new recession by the middle of 1989,” she said, predicting that the recession would last about a year and be of “moderate intensity.”