WASHINGTON -- President Bush's chief economic adviser has officially declared that the recession has ended and the long-awaited economic recovery has begun.
Michael Boskin, chairman of the Council of Economic Advisers, told reporters yesterday at the White House that the latest economic data shows that a wide range of sectors are now beginning an upturn.
"We do see over the last couple of months the first signals that the actual turnaround has begun," Boskin said. "This certainly looks like a recovery has begun."
Earlier this month, Boskin had publicly said that he believed that the recession had "bottomed out," and that the economy seemed poised for a recovery. But yesterday's statements put Boskin clearly on record as declaring that a recovery is under way.
TTC Boskin, though a presidential appointee, has developed considerable credibility by offering more candid comments on the state of the economy than did previous White House economists in earlier administrations. In fact, Herbert Stein, President Nixon's chief economic adviser, lauded Boskin recently for his admission last winter that the recession had begun; Boskin did so earlier in the economic cycle, Stein said, than had any other presidential economist during any previous recession.
But despite Boskin's upbeat comments, sources stressed that senior administration officials may still try to push the Federal Reserve Board to cut interest rates further in order to help accelerate the recovery. Secretary of the Treasury Nicholas F. Brady has frequently criticized Fed Chairman Alan Greenspan, arguing that the Fed chairman should lower interest rates at a faster pace.
The administration will not try to persuade the Fed to cut rates next week, when the central bank's key policy-makers gather to review monetary policy, sources said, but may push for such action later this year if the economy does not recover as rapidly as now seems likely.
Bolstering Boskin's assessment that a recovery has begun, other sources said a broad consensus was building on the Federal Open Market Committee, the panel that sets interest rate policy, that a recovery was under way and that futher rate cuts were not needed.
Most senior Fed officials also believe inflation is now under control, which they point to as evidence that the bank's moderate monetary policies of the past year have been sucessful.
Boskin's declaration that the recovery has begun came as a series of positive economic reports were released by the government.
Consumer spending, a critical engine for economic recovery, rose by a healthy 1.1 percent in May, the Department of Commerce said Thursday. At the same time, personal incomes rose 0.5 percent during May, the department reported.
Meanwhile, the Department of Labor said that the number of workers filing for unemployment benefits dipped for the first time in mid-June, the most recent week for which statistics are available. Economists often study such initial jobless claims to get an early indication of the rate of growth or decline in employment. Greenspan has frequently cited such jobless claims as one of the most important statistics that he studies to forecast the economy's direction.
Now, economists are widely predicting that the government will soon report that the nation's output of goods and services in the second quarter turned up for the first time since the third quarter of last year.