New Data Gives Bush Economic Figures a Boost
Economic growth was far more robust during the final year of George Bush’s presidency than previously reported, and the 1990-91 recession was much milder than generally believed, the Commerce Department said Tuesday.
The changed numbers, which represent a more accurate survey of activity at the nation’s retail stores and shopping malls and updated corporate tax returns, show that consumer spending was substantially more buoyant in the months preceding Bush’s defeat in November, 1992, than believed at the time.
Viewed alongside other new Commerce Department figures showing economic activity this year, the revisions overturn conventional beliefs about the nation’s economy under Bush and the man who defeated him, President Clinton. Instead of showing an economy improving rather steadily from the 1990-91 recession, the latest numbers indicate that the economy rebounded sharply under Bush and has slipped back to a much slower rate under Clinton.
“It clearly shows that the perception is more important than the reality, that spin control is more important than the actual number,” said Martin Regalia, chief economist at the U.S. Chamber of Commerce.
The economy in 1992 “was doing significantly better than the Democrats were saying, but then the Democrats quit saying that the minute Clinton got elected,” Regalia noted.
Michael Penzer, senior economist at Bank of America in San Francisco, said: “There must be people in the White House this morning (saying), ‘Thank God these numbers weren’t released during the election.’ ”
The revised numbers show that the nation’s output of goods and services grew 3.9% from the fourth quarter of 1991 to the fourth quarter of last year, substantially higher than the original figure of 3.1%. The 3.9% growth was the highest since a 5.1% rate of expansion in 1989, though still well below the highs of 8% in the boom years of the mid-1980s.
During the recession, which ran from July, 1990, through March, 1991, economic output--formally called the gross domestic product--declined at an annual rate of 2.1%, a slump far less deep than the earlier estimate of 2.9%.
Commerce officials emphasize that the revisions, some of which are among the biggest ever made by government statisticians, are based on more precise data than was available when the initial announcements were made. In particular, they reflect the increased role that discount super-stores and mass-merchandising outlets play in the retail market.
The department also released revised numbers Tuesday for the first half of 1993, confirming the current anemic economic performance. Output expanded at a sluggish rate of 1.8% during the second quarter of this year, a slight improvement over the original report of 1.6%.
“In 1992, we had a lot of GDP growth for a meager amount of jobs and in 1993 we have had a lot of jobs for meager GDP growth,” Alan Blinder, a member of the President’s Council of Economic Advisers, said at a briefing for reporters. “So I think we should look at 1992 and 1993 as a piece.”
He said there may be a lag between economic growth and job creation, as last year’s expanded spending helped generate new jobs this year. However, the growth in employment is still very modest--the jobless rate last month was 6.8%, a relatively high level for a business expansion entering its 30th month.
The Clinton Administration will issue a new, gloomier economic forecast today, suggesting that economic growth will be 2.1% this year, down sharply from April’s optimistic projection of 3%.
The new numbers demonstrate the limited ability any President, whether Democrat or Republican, has to significantly change the direction of the economy. They also highlight the risk involved.
Under Bush, who was perceived as a hands-off President, the economy bounced back strongly by 1992, the figures show. Under Clinton, who is viewed as much more activist, economic growth is sluggish, and even his own advisers are cutting back their once-optimistic forecasts.
Regalia said Bush’s problem in 1992 was not his economic diagnosis as much as his political bedside manner, which left many Americans believing that he was not attuned to the impact the recession had on their lives.
“While he was correct about his assessment of the economy,” Regalia said, “he wasn’t as correct in his assessment of people’s feelings about the economy.”
Bush’s enormous popularity after the military victory in the Persian Gulf War melted away in the face of the discouraging economic statistics. His advisers, notably Treasury Secretary Nicholas F. Brady, said the economy was recovering and advised against any special proposal by Bush.
In response to his increasingly vociferous critics, the President at one point said: “Message: I care,” and promised to put Secretary of State James A. Baker III in charged of the economy if he were elected to a second term.
Clinton and the Democrats, on the other hand, pounded hard on the economic issue throughout the campaign, citing the numbers gauging economic output as evidence of the need for change. The Democratic campaign war room featured the slogan, in giant letters on a wall: “It’s the economy, stupid.”
Clinton won but the Commerce Department’s new numbers suggest that Bush’s view of the economy was more accurate than many people realized.
Consumers were actually spending more for furniture, appliances and a wide variety of other goods. Total gross domestic product increased by $63.7 billion for 1992.
The fourth quarter of 1992 showed that GDP increased at an annual rate of 5.7%, helped by a big surge in personal disposable income, which rose at an annual rate of 10.6%. This reflected early payments of bonuses, as some people arranged to have income shifted into 1992 in anticipation of higher taxes this year.
Even so, the lackluster growth this year does point up the flaw in Republican arguments that the post-recession economy was healthy.
“The Republicans can’t come back and say, ‘We were right, you are all going to be in great economic condition,’ ” said Barry Bosworth, an economist at the Brookings Institution in Washington.
Despite extraordinarily low interest rates, home sales are lagging. And many big corporations are continuing to slash payrolls even as they enjoy profits. The employment cutbacks normally associated with recessions are now a standard tool of management to increase productivity and profits.
Times staff writer James Risen contributed to this story.
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Another Look at the Numbers
Commerce Department officials say the revisions in key economic yardsticks are based on more accurate data than was available when the initial estimates were made.
Previously Revised reported growth growth figure Gross Domestic Product, 0.9% 1.4% 1989-92 Gross Domestic Product, 3.1% 3.9% 1992 Gross Domestic Product, 4.7% 5.7% 4th quarter, 1992
Sources: Bureau of Economic Analysis, Commerce Department
