The Economy at Midyear

July 02, 1992

One person's persistent recession is another person's slow economic recovery. Much depends on where you live, whether you have a job, how much you are in debt, what your instincts tell you.

A year ago at this time, presidential economic adviser Michael Boskin was proclaiming to anyone who would listen that the recession was over. Some of his friends in the realm of the dismal science still insist, doggedly, that he was right. But the general consensus is that the economy faltered into a double dip later in 1991, strengthened a bit in early 1992 and now teeters somewhere between a very gradual pickup and a dreaded triple dip.

President Bush, who only a few weeks ago predicted economic growth would secure his re-election, once again is putting pressure on the Federal Reserve Board to give things a boost by lowering interest rates. This is mid-1991 all over again. Actually, the Fed has been dropping rates notch by notch for months without being able to inject any appreciable stimulus in factory activity, consumer buying, construction or home sales.

Mr. Bush's fretfulness reflects a knowledge that time is running out on prospects for making a difference before the November election. On the fiscal side, neither politics nor the deficit gives Congress and the White House much leeway to prime the pump. The deficits of the Reagan-Bush era are just too huge. So the burden is placed, as usual, on monetary policy through interest rates.

The president's plight, of course, spells opportunity for his opponents. Democrat Bill Clinton is touting an economic plan that is heavy on public sector investment ($50 billion to "Rebuild America") but unconvincing on how to unleash the private sector or deal with the deficit. Independent Ross Perot says his first priority will be to expand the job base but he has been short on details.

What all three candidates must know is that nothing spectacular can be anticipated for the economy in 1993. If the nation achieves 3 percent growth -- half the rate of the 1983 recovery -- whoever is in residence on Pennsylvania Avenue will make a virtue of not presiding over a recession.

All this assumes there will not be a triple dip during the second half of this year or it will be so ambiguous that it can dismissed or argued away. Though bad news will be good news for Mr. Clinton or Mr. Perot until November, if either wins the presidency he will be looking as eagerly for good news as Mr. Bush is now doing. And perhaps without much more success.

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