'83 GNP, inflation, unemployment
Washington — The White House's latest dab of rouge on its economic forecast for this year was no casual gesture.
* In economic terms, Reagan's new figures, released March 25, were intended as a signal to consumers that they can safely spend more as recession recedes. This should help hasten recovery.
* Legislatively, the new White House numbers could possibly help Reagan stem the erosion of support for his budget among congressional Republicans. The Senate takes the budget up on its return to Washington next week.
* Politically, it could help speed the return of Republicans generally to the Reagan camp, a trend already under way in recent weeks. Reagan's job performance has rebounded five points in the Gallup poll, for instance, as GOP loyalists have regained confidence in him.
But it does little to dispel the American voters' preoccupation with unemployment, Republican analysts concede. ''The single focus is still unemployment,'' says a Republican official likely to play a major roll in any future Reagan reelection campaign. ''Unemployment dominates other areas such as inflation by as much as 10 to 1.''
True, the modest upbeat blush added to Reagan's 1983 economic outlook largely brings administration numbers into line with expectations of forecasters outside of government and on Capitol Hill.Real growth in gross national product is now seen by the White House as up 4.7 percent by the fourth quarter, inflation is expected to be down to 4.5 percent, and unemployment below 10 percent.
The revision remains far from the ''rosy scenarios'' put out by the administration during the previous two years. It's consistent with the Reagan team's plan for a moderately paced recovery less likely to reignite inflation. Ironically, it brings the analysis of Reagan's professional advisers more into line with the President's own optimistic expectations. And it helps the credibility of Martin Feldstein's efforts as the new chairman of the President's Council of Economic Advisers.
The revised numbers should give the White House a bit more leverage on Capitol Hill when deliberations on the budget and defense spending resume after the congressional Easter recess.
The shifts in the White House forecast means about $10 billion less in the fiscal 1984 deficit, Mr. Feldstein says. The original forecast was for a $192 billion deficit. This is too small a difference to suggest any change in the administration's basic policies, Feldstein quickly adds. However, Reagan budgeters are poring over the new forecast's deficit implications. They're scheduled to issue a reporton April 10.
Congress at once began to read the new forecast as a ''stay the course'' Reagan maneuver. Some observers noted that the revision was an unusual exercise in itself, since White House economic forecasts are typically not updated until July.
''They're trying to stem the erosion (of support for the White House's budget) in the Senate,'' says one Capitol Hill budget aide. ''They want to show Reagan's policies are aiding the economy. They want to show the country can afford more defense spending. They're saying the kind of economy pumping that the Democratic budget plan would achieve is not really needed.''
''This is the kind of bombardment of issues and numbers the Hill can expect to see from the administration to stop the Senate from dropping the defense spending (increase) to 5 percent as everybody around here expects them to do.''
The $10 billion decline in next year's deficit forecast is not all that big - about the margin of error in forecasting - when measured against a $200 billion deficit base, economists agree.
But it could affect the budget debate that resumes April 6 with Senate hearings. ''Everybody knew the administration's first numbers were too low,'' says a Senate budget expert. ''These numbers bring the administration into line with everybody elses' view of reality. It has one public relations advantage. Reagan can say the House bill doesn't really come in any lower on the deficit.''
''The House Democratic budget resolution, passed last week, using Congressional Budget Office forecast numbers, came in with a $10 billion lower deficit,'' the Senate aide says. ''The White House can now say it was just a difference in economic assumptions.''
The administration's forecast revision was welcome, though not actually news, to professional economists. ''What Marty (Feldstein) is trying to do is establish the credibility of government forecasts,'' says Robert Gough, a Data Resources Inc. economist. ''I think he's done a good job of that,'' Mr. Gough adds, noting that improvement in inflation, housing, industrial production, and oil prices have changed the picture since Feldstein's original December 1982 forecast.
''The new forecast says even more to the American people than to Congress,'' Gough says. ''The American consumer has been very nervous - about job security, high interest rates, and a rekindling of inflation. The consumer is constrained by a crisis of confidence. But the typical American household is not in that bad shape. The adminstration hopes to publicize that things are better, to help stimulate the recovery.''