Bush Admits U.S. Is in Slump; He Blames Iraq : Economy: The President says the gravity of the slowdown will depend on oil prices. He gives no hint of any steps he plans to head off a recession.

President Bush conceded Thursday that the nation is in “an economic slowdown,” and said the slump’s depth and length will depend on the behavior of oil prices in the face of continuing turmoil in the Persian Gulf.

“I’m not an economist, but most seem to feel that if we have a recession . . . that it will not be deep and that we’ll come out of it relatively soon--six months at most,” Bush said in a late-afternoon interview on Cable News Network.

“The oil question that comes from Saddam Hussein’s taking over of Kuwait is a big question mark here,” he added. “That is the major question mark in terms of the depth of the slowdown or recession.”

Although Bush declined to join many private economists in calling the slowdown a full-fledged recession, his remarks Thursday were the most bearish he has made about the state of the economy.

They also marked the President’s return to the argument that tough U.S. action in the Persian Gulf is needed to preserve the West’s economic security--an argument he made when he first deployed U.S. troops to the Persian Gulf but later downplayed.

“You have all kinds of ingredients (in the Persian Gulf situation), and jobs, I’d say, comes under the heading of the economic security of the world,” the President said Thursday. “And it’s a very important part of this.”

His remarks came as Bush summoned top business leaders to the White House to seek their views on how to bolster the economy. At the session, the President did not hint at any new steps to help head off a recession.

Although many economists have warned that the sharp rise in oil prices has contributed to the slowdown here, not all of them have agreed that the slump comes entirely as a result of high energy prices. Some also say Bush’s own economic policies are to blame.

Bush conceded Thursday that “some regions” of the country are depressed enough to be technically in a recession. But he noted that other areas are “doing quite well,” and he refused to say the economy is in a recession.

But the President was adamant in blaming the slump on public “fear” resulting from the sharp increase in oil prices that has followed Iraq’s Aug. 2 invasion of Kuwait.

“There’s a slowdown, an economic slowdown,” Bush said in the CNN interview, “and it’s a disproportionate increase in the price of oil that stems from what (Iraqi President) Saddam Hussein has done. It’s the fear because of what he’s done, and it does mean jobs.”

Thursday’s White House session with business leaders, one of a series Bush has said he plans in the face of a worsening economic picture, was closed to reporters. Wary White House officials ordered participants not to discuss what went on.

But business leaders who attended said the President listened to generally downbeat reports from the executives, particularly involving the real estate and construction industries.

The 1 1/2-hour session with 10 leaders from manufacturing, banking and service-related industries followed a similar Wednesday meeting with banking regulators, in which the White House refueled the long rift between the Administration and the Federal Reserve Board.

At that session, officials confirmed Thursday, Commerce Secretary Robert A. Mosbacher criticized the Fed for sparking a credit crunch.

“I think there was probably a view (among business leaders) that we may have slipped into a recession,” John G. Medlin Jr., president of First Wachovia Corp., a leading North Carolina-based bank holding company, told reporters afterward. “There was not much argument that we were somewhere in that area between a little growth and a little decline.”

There was no evidence, however, that either Bush or other Administration officials tried to lobby Federal Reserve Chairman Alan Greenspan to get the Fed to quickly lower interest rates.

Indeed, the President appeared to be endorsing the tightening in bank lending policies, telling CNN interviewers: “Well, sometimes you have to pay for excesses, and we had a kind of go-go lending policies in some of our financial institutions.”

Bush said one business leader in Thursday’s conference had told him: “It doesn’t hurt to shake things out.”

“We got into a lending psychology in some parts of the private sector that there’s no tomorrow, and loans were made then that wouldn’t be made now,” Bush declared.

Bush had been quiet about the economic situation until last Friday, when he conceded in remarks to reporters that he was “concerned about an economic slowdown in the economy” and launched a review of the economic situation by top policy makers.