Get Used to It

3 minute read

“ONCE BITTEN, TWICE SHY,” GOES THE OLD SAYING, and it was in that cautious spirit that Washington’s top economic policymakers greeted reports last week that the economy had grown at a rate of 2% in the first quarter of 1992. It was nearly a year ago, after all, that many of the same experts, after examining similar figures, pronounced the recession over — only to watch an anemic recovery sputter out later that summer. Now, with an election six months away, no one wants to cry “Recovery!” prematurely again. “There are some areas that are still hurting,” said an equivocal George Bush, “but clearly this is a good sign.”

The 2% growth in gross domestic product was the strongest since early 1989 and came after an increase in consumer spending. Bush’s problem is that while the recession has been technically over for a year, this doesn’t feel much like a recovery — though many economists warn that this may be as good as it’s going to get. Unemployment remains stubbornly high; the jobless rate continues to hover at 7.3%, a six-year peak, and experts say it will take a more robust rate of growth to make a dent in that figure. Typical recoveries since World War II have boasted growth rates of 5% and sometimes higher; by contrast, the current 2% rate is paltry, and unlikely to improve soon. Michael Boskin, chairman of the President’s Council of Economic Advisers, last week said he expected the economy might inch toward a 3% growth in GDP by year’s end, but he also said he could not rule out the possibility that growth would again flatten out. Asked to pronounce the recession over, Boskin demurred: “We’ve returned to a pattern of growth.”

There were other hopeful signs: Factory orders rose 1.6%, the third jump in as many months. Similarly, the government’s index of leading economic indicators was up for the third month in a row. Two surprising reports came from Detroit, where General Motors and Ford turned in their first profits in more than a year, though many analysts had expected the automakers to notch up another round of losses. Ford, which last posted a profit in the third quarter of 1990, reported a first-quarter profit of $338 million, buoyed by sales of cars and trucks at home and the sale of its Dealer Computer Services. Chrysler was not so fortunate. The embattled company lost $13 million in the first quarter.

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