NEW YORK -- The economists who advise top banks and investment houses split Wednesday on whether President Reagan 'stayed the course' in his State of the Union address, but agreed that the speech contained few surprises.
'It doesn't change my forecast because I was expecting it,' Michael Evans, chief economist for the Wall Street Securities firm of McMahan, Brafman, Morgan and Co., said.
Evans, who is predicting 'at best only a modest recovery,' found little in Reagan's economic plans to raise hope the spiralling federal deficits can be controlled. 'On a scale of 1 to 10, I'd give him .5,' he said.
'Basically a bland kind of speech,' Newton Zinder, vice president for reasearch at E. F. Hutton, said. 'I don't think it will have much impact as far as the stock market is concerned.'
The Dow Jones Industrial index dropped early Wednesday, then headed higher in active trading. 'There was nothing negative in President Reagan's speech but there wasn't enough strength in it to drive the stock market strongly forward either,' Barry Berlin, Shearson-American Express vice president, observed.
Zinder suggested Reagan's speech, though 'bland,' was a change of direction.
'He seems to be saying government has a job getting the economy rolling, which is sort of a switch for him,' he commented.
Allen Sinai, senior economist at Data Resources, agreed the latest Reagan program was a shift to a more activist approach toward economic affairs.
'The administration is very quietly supporting an undoing of the original very loose fiscal policy,' he said.
Others, however, saw the speech as business-as-usual.
'Given the rumors that were circulating, I thought he stayed the course a lot more than people had been speculating,' Milton Ezrati, senior economist at MH-Edie Economics, a unit of Manufacturers Hanover Trust Co., said.
Ezrati, who has been predicting a modest pickup in 1983, suggested the bond and stock markets might have reacted more negatively to a more dramatic speech.
'I think any lurching on his part, or major concessions to the deficit, would have been disappointing to the markets,' he said.
The President's proposal for a standby tax increase for 1985 if the deficit is not brought under control interested the experts, although they were divided on its potential effectiveness.
'I don't think that should be dismissed out of hand,' said Gordon Pye, senior vice president and manager of economic research at Irving Trust, who called the idea 'intriguing.' Given the great uncertainties of deficit projections, he noted, 'it would stop all this talk about $300 billion deficits in 1988.'
'It's better to have it there than to have nothing,' Sinai said. 'But the problem is it's scheduled for 1985. We don't even know who's going to be president in 1985.'
Ezrati said the standby tax was actually a backdoor attempt to eliminate the effects of indexing, an upcoming tax law change aimed at protecting taxpayers from 'bracket creep' due to inflation.
Some experts believe it is the future effects of indexing that are balooning upcoming deficit projections.
'If indexing is really responsible for the deficit, he'll have the standby tax to wipe out its effect,' Ezrati said. 'The big concession he made was to give up indexing effectively.'
Leif Olsen, chief of economic policy at Citibank, argued Reagan had stayed the course even on indexing.
'I certainly don't believe the tax would eliminate the effects of indexing at all,' he said. 'Indexing is here to stay. One could put it the other way around. If the contingency tax goes into effect, indexing is going to mute its impact on the taxpayer.'