Bush Says Slump Nearing End; New Data Backs Claim

President Bush, bolstered by fresh economic statistics, said Thursday that he believes that the recession may be nearing an end, and he asserted that “there’s an awful lot of economic forecasters that would agree.”

In an address to a retailers’ group, Bush said he believes that the downturn is “bottoming out” and that the economy will begin to recover soon. But he stopped short of predicting that any upturn will be vigorous.

Bush made his remarks as the Commerce Department reported that after four months of steady declines, factory orders for durable goods rose 2.9% last month, suggesting that the economic downturn may have ended during the current quarter.

Separately, the Labor Department reported that new claims for unemployment insurance fell slightly nationwide during the week ending May 11. The drop of 5,000 claims was small, but it marked the third week in a row that this indicator has improved.

The new statistics came as a survey of 58 business economists showed that 71% of those surveyed believe that the recession will end in the April-June quarter, and another 11% believe that the recovery has already begun.

The survey by the National Assn. of Business Economists tended to support Bush’s optimism. Still, about 93% of those surveyed forecast that the recovery will be relatively anemic.

“What we have today are some more pieces of the puzzle that seem to point to recovery, or at least to a bottoming out,” said Michael Penzer, economist for Bank of America in San Francisco.

“We won’t know for sure until several months from now when exactly we hit bottom,” Penzer said. “But it now seems safe to say that it will occur in this quarter, and that we will learn the recession bottomed in April, May or June.”

Allen Sinai, economist for Boston Co., a New York investment firm, agreed. “There is no question that the pace of layoffs has lessened substantially, but as yet there is very little evidence of new hiring,” Sinai said.

“So the recession seems to be lessening, but it is probably not yet at an end,” he said.

In assessing the sharp increase in durable goods orders, analysts cautioned that the figures are volatile and that one report alone does not make a trend. By contrast, new orders plunged 4.5% in March. And they still are down 7.4% over their levels of a year ago.

Even so, the figures showed unquestionable strength virtually across all sectors of the economy except aircraft and aircraft parts. There were especially strong increases in orders for industrial machinery, computers and electronic equipment.

Orders for transportation equipment, down during the three previous months, fell 4.5%, after a drop of 4.4% in March, mostly because of a slowdown in aircraft orders. But orders for non-defense capital goods, other than aircraft, rose 3.5%--the first such rise since January.

Durable goods shipments from factories to customers rose 4.3%, the first increase in five months. Virtually all industries reported higher shipments in April, including the depressed motor vehicle industry.

Durable Goods

New orders in billions of dollars, seasonally adjusted.

April, ‘91: 115.5

Source: Commerce Dept.