Economic Recovery Evaporates
WASHINGTON — THE nation's economy throttled back during the second quarter of 1992, after a seeming comeback during the first three months of this year.
According to United States Commerce Department figures released Thursday, the gross domestic product (GDP) grew at 1.4 percent from April to June, which was one-half its 2.9 percent growth rate for January to March.
Adding insult to injury, the Commerce Department also released revised figures for the nation's economy for 1990 and 1991, the recessionary years under the Bush administration. The downturn during that two-year period was more severe and longer than previously estimated, according to government figures.
Speaking to reporters at a Monitor breakfast yesterday, Treasury Secretary Nicholas Brady attributed the slowdown to a weak international economy, and slackening demand for US exports in Asia and Europe. He pointed to burgeoning markets in Canada and Latin America as good news for US exporters.
Mr. Brady said that markets in Mexico and Canada cannot necessarily absorb the slackened demand in Europe and Asia. Nonetheless, Brady predicts that the US economy will grow by 3 percent during the second half of 1992, bringing the average annual growth rate to 2.5 percent.
He said that the lowest US interest rates in 20 years will begin to entice US businesses and consumers to borrow and spend more.
The news follows distressing economic data released earlier this week: a "stark loss" in July's consumer confidence registered by the New York-based Conference Board. The monthly survey of 5,000 households across the US shows American consumers are more negative about their current economic circumstances and more anxious about the coming six months.
Representing two-thirds of economic activity, more robust consumer spending is crucial to US economic recovery.
Despite the Bush administration's declaration months ago that the first-quarter growth would help fuel economic activity well into the year, it now appears that gains in the first quarter were destined to be mostly temporary. Commerce Department officials said they reflected federal subsidy payments to farmers, as well as White House orders to speed up life-insurance dividend payments to veterans and to reduce the withholding tax for this year.
The downward shift is particularly problematic for President Bush, whose popularity ratings among US voters has slipped dramatically in recent weeks.