Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, September 1, 1993 TAG: 9309010101
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The gross domestic product - the sum of all goods and services produced in the United States - advanced a lackluster 1.8 percent in April-June to a seasonally adjusted annual rate of $5.1 trillion, the Commerce Department said Tuesday. That followed a barely perceptible 0.8 percent gain in the first quarter.
The increases were slightly better than what the department reported a month ago - 1.6 percent in the second quarter and 0.7 percent in the first. But they're still far below what analysts were looking for when the year began, and they cast doubt on the strength of the momentum going into the second half of the year.
"Our forecast for the second half is 2.7 percent. . . . It's our forecast and I'll live and die by it, but I'm beginning to feel a lot less comfortable," said economist Martin Regalia of the U.S. Chamber of Commerce. "It's becoming a hope as much as a forecast."
The Clinton administration, too, is scaling back its projections. Laura Tyson, the chairwoman of the White House Council of Economic Advisers, has said the administration could reduce its 1993 growth forecast from 3.1 percent to as low as 2.1 percent when it releases its midyear economic review today.
At a briefing Tuesday, she cited three factors to explain the economy's sluggishness: depressed commercial real estate, military spending cuts and slowdowns in the economies of major U.S. trading partners.
"This recovery is about half the speed of previous economy with a delay, should soon start to help stimulate activity, particularly in housing, she said.
This year's languid growth offers a stark contrast to the relatively robust performance last year, when the economy expanded at a revised 5.7 percent rate in the fourth quarter, 3.4 percent in the third, 2.8 percent in the second and 3.5 percent in the first.
Economist Norman Robertson, an adjunct professor at Carnegie-Mellon University in Pittsburgh, said the revisions underscore the danger of fashioning government programs to aid the economy in the short run.
"It really makes the implementation of any kind of economic policy extremely hazardous, in the sense that the numbers on which the policy are based are often wrong and subject to substantial revision," he said.
Carol S. Carson, director of the department's Bureau of Economic Analysis, said this year's revisions were larger than usual because of the difficulty of monitoring fast-changing business conditions.
"With rapid changes in the economy, ranging from changes in the kinds of goods and services sold and changes in the kinds of retail outlets that sell them to changes in tax laws and accounting rules, statistical samples quickly become unrepresentative and therefore less reliable," she said.
The government reported a sharper deterioration in the trade balance than first estimated. And it said consumer spending wasn't as good. But the negatives were more than offset by higher government spending and less slowdown in the growth of business inventories than first thought. The bright spot was business investment in new equipment, which rose at a 17.4 percent annual rate in the quarter.
by CNB