'The Clinton Recovery'

December 05, 1993

"The Clinton Recovery" it is not -- at least not yet. But if the current upswing can hold for another 11 months those three little words will be trumpeted from the White House as next year's elections draw nigh. Presidents take the credit and get the blame for what happens on their watch, even though most things are beyond their control.

There is a happy coincidence for Bill Clinton between his triumphs on NAFTA, the Brady bill and settlement of the American Airlines strike and a stream of upbeat economic statistics. Technicians rightly insist, however, that it is just that: a coincidence.

If profits are growing, factories reactivating, housing sales moving up, consumer and CEO confidence strengthening, unemployment down to 6.4 percent after the biggest one month drop in a decade, interests rates low, inflation in check and overall growth pegged above a healthy 4 percent for the fourth quarter, these are due to forces at work over a long period.

But Mr. Clinton, like presidents before him, will take the good news in whatever form it comes -- and run with it. "Look at the direction we are going in," he told the Democratic Leadership Council. "We have made a difference." After such a dismal beginning, who can blame him?

On the down side, the administration has to worry about the jolt to the recovery that may come next April when this year's tax increases put the bite on millions of taxpayers. It also is spooked by the possibility that the Federal Reserve Board will raise interest rates if there is the least little sign that inflation may be on the way back.

Right now, the key drag on the economy is a growing trade deficit. That it comes just after the NAFTA vote and as the administration gears up for sweeping world trade reforms under the General Agreement on Tariffs and Trade is just one of those ironies. It underscores the case for free trade as a real plus for this country with its agricultural resources, its technological prowess and its leading position in service industries.

But trade offers no quick solution as Japan tail-spins and Europe wallows. Domestic factors prevail. Now that downsizing has improved the profit margins of hundreds of companies, will they begin to increase hiring of managers and white-collar workers, as early figures indicate? Will manufacturing make a comeback as orders start to come in at a time of low inventories? Or will growth slow down in 1994 as disposable income lags behind current consumer spending levels?

The coming federal budget will hardly be a pump-primer as the administration wrestles the deficit. And health care reform, a move likely to increase financial burdens on small businesses, will hardly act as an economic stimulant.

So, a resurgent economy generated within the private sector may be the president's trump card. It might not be his creation but you can be sure it will be billed as "the Clinton Recovery."

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