Lag Is Predicted in Southland Recovery : Economy: Bush adviser says there are signs of improvement nationwide, but the gains may take an extra six months to reach this area.

President Bush’s chief economic adviser predicted Thursday that the economic recovery in Southern California will lag behind most of the rest of the nation by at least six months.

“There are some hopeful signs that the national economy has begun to improve,” said Michael J. Boskin, chairman of the President’s Council of Economic Advisers. But, he said, “it is likely that California will lag behind. I hope I’m wrong about that.”

Speaking at a gathering of Orange County business people, Boskin said most economic indicators suggest that the United States is inching slowly out of the recession.

The Bush Administration, concerned about a sluggish economy in a presidential election year, has been forecasting that the economy by the second half of 1992 will be growing at an annual rate of 3%. That would be the fastest growth rate of the Bush presidency.

But government statistics released Thursday cast doubt on the prospects for a healthy economic recovery.

The government reported that the economy grew at an extremely sluggish 0.4% rate in the fourth quarter, just half the previous estimate of 0.8%. And corporate profits fell 4.5% in 1991, to $183.1 billion, the lowest annual total since 1987. Business profits, however, rose a scant 0.4% for the final three months of 1991.

Boskin acknowledged that the economy is “not growing at a sufficient rate,” but he insisted that the nation should expect “a moderate recovery as the year progresses.”

The fallout from the savings and loan crisis, the federal deficit--which forces the government to continue borrowing money--sluggish consumer spending and reduced defense spending are “putting a drag” on the economy, Boskin said.

Boskin, who was appointed council chairman in 1989, spoke at Chapman University’s annual economic forum in Irvine. More than 700 Orange County business leaders paid $200 a plate to attend the university fund-raiser.

Boskin praised Bush’s economic proposals, which he helped formulate, and in turn criticized Congress and the economic plans of Democratic presidential candidates Bill Clinton and Edmund G. (Jerry) Brown Jr.

Boskin said the President’s proposals to reduce government spending, broaden presidential veto powers, restrict civil litigation involving business, and streamline public education and health care should be enacted immediately to help the recovery.

Bush, in campaign speeches, has been pushing for reforms in those four areas.

Boskin drew his only round of applause when he attacked the nation’s army of civil lawyers, whom he called an “albatross around the neck” of business.

“We spend way too much time suing each other rather than producing goods and ideas,” he said.

While acknowledging that the soaring cost of health care services is “gobbling up the (federal) budget,” he criticized the idea of a national health care system as unnecessary government meddling.

In a partisan speech that was well received by his audience, Boskin said Bush will be ready to work with Congress on a recovery program if Congress is willing to put aside its own economic plans.

“There are a lot of people who think the President has no program,” Boskin said. “I’m optimistic that we will be able to turn this economy around.”