Economic growth fizzled last quarter Recession deeper than was thought, government says

July 31, 1992|By New York Times News Service

WASHINGTON -- The economy's growth was a stunted 1.4 percent from April through June, less than half the growth rate of the first quarter, and the 1990-1991 recession was considerably longer and deeper than previously believed, the government said yesterday.

As Democrats quickly went on the offensive, seizing the figures to castigate President Bush's economic stewardship, the White House rushed to put the best face it could on the double dose of bad news.

Canceling plans to spend a day free of public appearances, Gov. Bill Clinton of Arkansas called a hasty news conference in Little Rock.

"Today's economic statistics confirm what the American people have been trying to tell the president for some time now," he told reporters assembled on the lawn of the governor's mansion. "We are in a crisis, an economic crisis, and it's far more painful than this administration has ever understood."

Mr. Bush, on a campaign stop in Waxahachie, Texas, on his way to California for more political appearances, told workers at the supercollider construction site that "this kind of uneven growth is not unusual." But he acknowledged that the economy "is not growing fast enough."

"Economists predict that the economy is going to get stronger the rest of the year," he said, adding that low inflation and exports should help fuel growth.

But the report on gross domestic product -- the total output of goods and services produced by labor and operations in the United States -- had few bright spots.

"It's a poor second-quarter number," said David Wyss, an economist with DRI/McGraw Hill in Lexington, Mass. "It shows a continuation of this spurt-and-stall pattern we've seen since the Persian Gulf war ended. You get a couple of good months of growth. Then there's no momentum and the economy stalls out."

Although a number of economists are worried that the poor second-quarter performance means economic growth could fizzle altogether, most economists expect the second half of the year to be stronger than the first, spurred in large part by lower interest rates. But few expect a strong pickup soon.

"It's doubtful that the economy can help George Bush between now and the election," said David D. Hale, chief economist at Kemper Financial Companies. "He's going to have to live with sluggish growth."

Indeed, in an accompanying annual report revising growth estimates for the last three years, the government said that the recession that began in mid-1990 lasted three quarters rather than two and that during the downturn the economy shrank by 2.2 percent rather than the 1.6 percent previously reported.

As for 1992, economists had expected later activity to be less robust than in the first three months.

But the second quarter's 1.4 percent growth was even weaker than the 1.7 percent of the consensus forecast. The drop in growth was accentuated by an upward revision in the estimate for first-quarter growth to a respectable 2.9 percent, from 2.7 percent.

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