Jobless Rate Dips; Economy Remains Flat

By JAMES RISEN

Oct. 3, 1992 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

In the last major snapshot of the U.S. economy before the November presidential election, the government reported Friday that the nation’s unemployment rate fell slightly in September to 7.5%, but the decline came as 57,000 jobs were lost during the month.

The mixed employment news offered a picture of an economy struggling but still failing to shake off the doldrums that have beset the nation for nearly three years.

While the jobless rate was the lowest since May, Friday’s weak employment report did not provide the sort of clear economic signals that could boost President Bush’s reelection campaign before Nov. 3.

“It is not enough to pull President Bush’s chestnuts out of the fire,” said Raymond Worseck, chief economist at A. G. Edwards, a St. Louis-based financial firm.

Despite the slight drop from August’s 7.6% rate, the nation’s employment outlook remains bleak, the Labor Department confirmed. Economists, increasingly concerned about the threat of yet another recession, cautioned that the decline in the jobless rate came mainly as a result of a reduction in the overall labor force as more and more discouraged Americans stopped looking for work.

In California, the unemployment rate fell from 9.8% to 9.4%, but that was also largely due to a sharp drop in the state’s labor force.

Nationally, 1 million more Americans were unemployed in September than the year before, and the jobless rate last month was higher than at any time in the depths of the recession in the spring of 1991. The September rate was 2.1 percentage points higher than the 5.4% when Bush took office in January, 1989.

“The economy is flat; we haven’t created any jobs in over a year,” observed David Wyss, an economist at DRI-McGraw Hill, an economic forecasting firm in Lexington, Mass.

Still, Bush seized on the reduction in the unemployment rate, describing it as “encouraging news.”

“This is the third consecutive month of moving in the right direction,” he said, referring to jobless rates that have fallen a tenth of a percentage point a month from the June level of 7.8%.

Bush added that the economic data contradicted Democratic presidential candidate Bill Clinton’s contention that the economy remains mired in a slump. The numbers “certainly go against the political grain, where some are saying everything is getting worse,” Bush said in a television interview. “It isn’t. We’ve had five consecutive quarters of growth--not recession but growth nationally.”

The employment losses were, indeed, smaller than many economists had forecast and so seemed unlikely to prompt another effort by the Federal Reserve Board to nudge the economy by cutting interest rates yet again.

But the job numbers, combined with a separate government report released Friday showing that factory orders dropped for a second straight month in August, still prompted a sharp plunge on Wall Street: the Dow Jones industrial average fell 53.76 points Friday.

The figures also provided plenty of ammunition for Clinton. Speaking outside an unemployment office in Toledo, Ohio, the Arkansas governor said that the September jobless figures offered a “final report card” on Bush’s economic record.

“Unemployment remains high with no end in sight,” Clinton said. “Trickle-down economics has brought a tidal wave of unemployment and declining incomes, and every month it lays waste to the dreams of more Americans.”

On a regional level, the employment outlook in the key election battleground states also offered little clear help for Bush.

The jobless rate fell in such crucial states as Michigan, Ohio, Pennsylvania and New Jersey but rose sharply in Texas, Illinois, New York and Florida, where the effects of Hurricane Andrew continued to play havoc with the local economy.

But even in many of the key states where joblessness declined--including Michigan, Pennsylvania and New Jersey--the overall rates remained well above the national average.

Most economists could find little that was encouraging from any of the economic news released Friday.

“This may not be a recession but, whatever it is, it is not a recovery either,” said David Resler, chief economist at Nomura Securities International in New York.

Many economists now believe that the economy is trapped in a vicious cycle. A weak employment picture is holding down consumer confidence, which in turn is depressing consumer spending, which in turn is depressing corporate investment plans, which in turn restricts hiring.

“We have a job market that is very stagnant, very weak and consumers are responding to that by becoming even more pessimistic than they were before,” observed Jason Bram, an analyst at the Conference Board, a private business research group.

The Conference Board reported Tuesday that consumer confidence fell for the third straight month in September. The indicator in 1992 is at the lowest levels ever for a presidential election year since the board began surveying consumers in 1969.

The dark consumer mood is thus conspiring to keep the economy close to the edge of recession, roughly a year and a half after the recession supposedly ended.

The economy is growing at an annual rate of just 1.8%, far below the 6% average growth rate that has followed other recessions since World War II. Growth is so weak that some economists are now dubbing the economy’s current condition a “growth recession”--growth is so low that most Americans believe that the recession never ended.

“This economy has no momentum,” observed Alan Levenson, an economist at the WEFA Group, an economic forecasting firm in Bala Cynwyd, Pa. “We are not in recession, but we are not moving forward either.”

Jobless Rate Dips; Economy Remains Flat

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