History kinder to Bush economy Growth from '90 to present stronger than first reported

September 01, 1993|By New York Times News Service

WASHINGTON -- In its annual flurry of statistical revision, the Commerce Department said yesterday that the broadest gauge of economic performance was stronger than previously thought during most of George Bush's presidency.

Growth in the gross domestic product -- total output of goods and services within the country's borders -- was found to have been about half a percentage point higher in 1990 and 1992. And the shrinkage of the GDP in 1991 was half a point less, meaning that the brief recession that occurred then was less severe than previously portrayed.

This batch of economic data, which comes too late for Mr. Bush, was announced as the Commerce Department also raised its growth figure for this year's spring quarter to a 1.8 percent annual pace from the 1.6 percent estimated in late July.

Higher investment in inventories and bigger purchases by federal, state and local governments more than offset downward adjustments in the foreign trade sector and in spending on personal consumption.

But even as the revisions yesterday suggested a slightly stronger economy, consumer confidence as measured by the Conference Board, a business-sponsored organization in New York, remained at a depressed reading of 59 percent in August despite passage of the Clinton administration's budget package.

Most analysts had predicted that the GDP revision for the spring quarter would be downward, but word of a slightly faster pace of activity did little to change economists' expectations for the months ahead.

"I don't see a lot of momentum in these numbers," said Lincoln F. Anderson, an economist for Fidelity Management and Research, the Boston-based mutual fund group. "The strength that is there in components that are unlikely to continue" to do well, such as business equipment and the government sector, he added.

At the White House, Laura D'Andrea Tyson, the president's top economic adviser, said "This is still a modest recovery," although the United States now shows the best growth of any advanced industrial economy for the latest 12 months.

Ms. Tyson and Alan Blinder, another member of the Council of Economic Advisers, said there was nothing in yesterday's report to cause the administration to change its forecast of growth at about a 3 percent rate for the rest of this year and slightly less thereafter.

One of the most striking adjustments to economic history in yesterday's report was a jump of a full percentage point, to 5.7 percent, in the growth rate for the fourth quarter of 1992.

Government and private analysts attributed this variously to the relief efforts and the rebuilding from last year's hurricanes and to spending by people who, fearing tax increases under Bill Clinton, arranged to receive in 1992 income that they might otherwise have received this year.

There is no way, however, to quantify either factor, said Robert P. Parker, a Commerce Department official, nor can it be determined to what extent the prospect or fact of Mr. Clinton's election and one-party dominance of the government might have been a psychological force encouraging spending.

More relevant to the election was the fact that the economy was now seen to have been doing better than perceived during the campaign, particularly in the politically crucial second quarter of 1992. Growth for the period was put at a rate of 2.8 percent, twice as fast as was reported on three occasions last summer when the political conventions were under way.

Yet it is by no means clear that had the data published yesterday been known a year ago, Mr. Bush might have been re-elected.

For full-year 1990, yesterday's figures show, GDP grew 1.2 percent instead of the previously reported 0.8 percent, while the 1991 contraction was trimmed to 0.7 percent from 1.2 percent. The 1992 rebound was raised to 2.6 percent from 2.1 percent.

Each of the revisions, which were larger than usual, primarily involved personal spending for goods, business investment in new equipment and spending by government entities, the Commerce Department said. It added that the main factor in these was new inflation estimates for these components.

The recession, the department also found, involved a 1.6 percent decline in GDP from its second-quarter 1990 peak to its first-quarter 1991 trough, less than the 2.2 percent previously reported.

The Conference Board's confidence reading of 59, typical of a sluggish economy, was not only the same as in July but the same as a year ago when Bush was in office.

"The ordinary citizen is still a very insecure and apprehensive person," said Fabian Linden, supervisor of the monthly mail survey of 500 households.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.