Economy Up 2.4% in Summer--Short of Goal

The U.S. economy expanded at a modest annual rate of 2.4% during the summer, up substantially from the spring but still well below the rate expected by the Reagan Administration, the government said today.

The Commerce Department said the gross national product, the broadest measure of economic health, grew from July through September at four times the pace set in the previous quarter.

From April through June, the GNP grew at an annual rate of 0.6%, the poorest showing since the end of the recession in 1982.

Commerce Secretary Malcolm Baldrige blamed the country’s worsening trade performance for the weak GNP showing this year, contending that it has reduced economic growth by close to 2 percentage points.

He said there were signs in today’s report that the long slide in trade was coming to an end, and he predicted that the economy will expand at a 4% annual rate in the final three months of this year.

Beryl Sprinkel, chairman of the White House Council of Economic Advisers, acknowledged that the economy would have to register a “very strong increase” of 5.6% in the fourth quarter for the Administration to achieve its goal for growth. “I can’t predict at this point whether or not it will occur,” he said.

Consumer Spending

Although the 2.4% performance was a substantial improvement over the April-June quarter, the Reagan Administration had been forecasting that the economy would grow at better than a 4% annual rate for the rest of the year.

The improvement in GNP growth during the summer was led by a big jump in consumer spending, which was climbing at an annual rate of 7.2% in the July-September quarter.

This rapid pace reflected strong sales of new autos as consumers responded to cut-rate financing incentives.

The economy continued to be held back, however, by a deteriorating trade performance.

Exports rose at an annual rate of 15.4% in the third quarter, a big turnaround from the spring quarter, when they declined at an annual rate of 9.8%.