According to some analysts, the gains in the stock market reflect growing confidence
that the economy will avoid the recession that many had feared earlier in the year and instead come in for a 'soft landing', followed by a gradual increase in the business activity.
(A) that the economy will avoid the recession that many had feared earlier in the year and instead come
(B) in the economy to avoid the recession, what many feared earlier in the year, rather to come
(C) in the economy's ability to avoid the recession, something earlier in the year many had feared , and instead to come
(D) in the economy to avoid the recession many were fearing earlier in the year, and rather to come
(E) that the economy will avoid the recession that was feared eariler this year by many, with it instead coming
Meaning :
Analyst Said : Gains Reflect confidence . Confidence that Economy with Avoid recession. A recession that was feared by many but come soft with increase in business activity.
Sentence Structure :
According to some analysts, the gains in the stock market reflect growing confidence (Clause - Gain : Subject, Reflect - Verb)
That the economy will avoid the recession, (clause - Economy: Subject, Will avoid : Verb )
that many had feared earlier in the year and instead come in for a 'soft landing', followed by a gradual increase in the business activity. (clause That (Recession) : Subject, had Feared and had come verb)
Second clause modifies "Confidence" and Third clause modifies Recession.
Error Analysis :
1. Use of "that" - Usually That introduces clause (S + V), ( when lot of action is happening in small part of sentence GMAT always prefer Clause instead of Phrases ) As per above structure analysis, we have full clause after every occurrence of that and hence Use of that is correct.
2. Use of Will : Any future prediction need Use of simple future hence use of Will is correct.
3. Use of Past perfect Had : Is fear still exist ? No, It was expected / Feared by many but that fear is not there at the time of analyst making that statement. Analyst made that sentence in past and they talked about "Fear" their past event - So Use of "HAD" is not incorrect.
4. Modifiers : there is not misplaces or dangling modifiers, clauses introduced by "that" logically modifies its preceding noun.
So sentence is correct
Option B,C,D can be eliminated based on the absence of "that"
There are other issues as well in Option B,C and D, such as Incorrect usage of "Rather or Instead"
Let's analyse Option E (only option with "That")
that the economy will avoid the recession - Correct
that was feared eariler this year by many - Simple past tense, that means, when analyst made that statement Fear was in existence that means analyst statement in void. this part changes the intended meaning - incorrect
with it instead coming - Adverbial phrase acting as modifier, what this guy is trying to modify, Recession or economy not clear.