“Morgan Stanley Dean Witter’s chief economist, Stephen Roach, who has forecast a recession in the United States, driving stock prices down further, said in Paris yesterday that he had revised upward his forecast for a recovery in the fourth quarter but remained bearish over all,” according to a story in today’s New York Times.

“Mr. Roach said he expected the United States economy to contract by 0.5 percent this quarter and 0.6 percent in the July-September quarter before expanding 2.5 percent from October through December.”

“That compared with an April forecast for the gross domestic product to shrink 1.4 percent in the second quarter and 0.8 percent in the third. Mr. Roach said he had raised his fourth-quarter forecast from an initial estimate of 1.5 percent growth to reflect the Federal Reserve’s aggressive interest rate reductions and the tax cuts, which he said should be felt at the end of the year.”

” ‘While the forecast has not worked out perfectly,’ Mr. Roach continued, ‘I think we have succeeded in making the point that the U.S., and the global economy, is in a much weaker growth mode than anyone thought at the start of this year.’ “

“There were signs of weakness in data released in Washington yesterday. The labor market continued to slump into early June, with the number of initial applications for jobless benefits increasing to its highest level in more than eight years. Claims rose to 432,000 in the week ended June 2, a period shortened by the Memorial Day holiday, from 419,000 the previous week, the Labor Department said — the highest since September 1992.”

“The four-week moving average, which irons out week-to-week volatility, rose to 413,500 claims in the June 2 week from 402,500 the week before, its highest level since October 1992.”