WITH less than five months left in the presidential election campaign, the American economy is still yawning after almost two years of sleep.
President Bush, whose low approval ratings are directly linked to the very sluggish recovery from recession, has not managed to stimulate economic activity beyond short-lived spurts during this year. Joblessness, which reached an unsettling 7.8 percent in June, is the most visible sign of an ailing economy. Analysts say that the president's ability to counter this and other negative trends deteriorates as election day, Nov. 3, approaches.
The favored White House lever - interest-rate reductions designed to make borrowing cheaper and spending freer - so far has failed to produce the desired results.
Incessant pressure from Mr. Bush on the Federal Reserve Board has pushed interest rates to their lowest level in 20 years. But the steady stream of rate drops during the past two years has done little to encourage consumers and businesses. Workers are concerned about layoffs, and enterprises are reluctant to build inventory and expand production, because of low consumer confidence. Consumer spending makes up a crucial two-thirds of economic activity.
US Sen. Paul Sarbanes (D) of Maryland, chairman of the congressional Joint Economic Committee, says Bush needs "a wake-up call." He says the "dismal" June unemployment number, which registers 10 million Americans out of work, is "dramatic proof that the economy remains caught in the grip of a serious and prolonged recession."
Senator Sarbanes points to some sobering facts: New-home sales have fallen for four months in a row, down 25 percent from January; new claims for unemployment insurance are rising, "helping to end recent improvements in consumer confidence." Even exports, which Bush and US Secretary of Commerce Barbara Franklin say are the hope of America's future growth, fell in April, the second month in a row.
The high unemployment rate and rekindled public despair contrast sharply with the optimism sparked by the surprising 2.7 percent growth in the gross domestic product during the first three months of the year.
This past winter, the White House worked hard to spur spending activity with temporary measures such as speeded-up federal subsidy payments to farmers and life-insurance dividend payments to veterans, as well as a much-touted, but largely ineffectual, reduction in the withholding tax for this year.
Are there more steps the Bush administration can take to advance the country's economic growth and better position the president with American voters?
Herbert Stein, the Nixon administration's chairman of the Council of Economic Advisers, says Bush "can't change things very much" between now and November. "In the short run, he can offer spending for the cities in a fiscal package," says Mr. Stein. "But he has to do that without increasing the deficit in the long run, and that means tackling sacred cows by cutting entitlements such as Medicare."
"There's plenty of time between now and election day to reassert economic leadership," says William MacReynolds, an economist with the United States Chamber of Commerce. But in a cruel Catch-22, if American consumers gain more confidence, then more unemployed will try to enter the work force and will take a longer time to look for jobs.
Mr. MacReynolds says: "Because very few businesses plan to increase their employees, the job search will remain tough and the jobless rate high, if not higher than 7.8 percent."
Bush's opponents have been quick to make political capital from the economy's misfortunes.
John Cregan, president of the conservative US Business and Industrial Council, says most of its 1,500 members - business leaders from across the US - supported Bush in 1988. In recent years, however, Mr. Cregan has found himself bitterly opposing Bush policies and fighting for concessions from the White House, such as the moratorium the administration imposed on a host of regulations that would eat into corporate profits.
At the annual economic summit in Munich this week, Bush missed the opportunity to earn some fast and desperately needed political capital, Cregan says.
During the July 6-8 meetings with Group of Seven leaders from the world's richest countries, the president should have ended laborious negotiations toward a global trade accord, which is "used by the Europeans and the Asians to stall US interests while they continue to invade our open markets and protect theirs," says Cregan.
He warns that this is the "type of ignorance that has created Ross Perot and the now-famous protest vote," and says: "A political nightmare looms for George Bush and the GOP in November if things do not change."
Preparing for Gov. Bill Clinton's nomination at next week's Democratic convention in New York, Senate majority leader George Mitchell (D) of Maine, who helped craft a national economic strategy, attacked Bush for rising unemployment, inadequate health care, declining disposable incomes, and high public and private debt.