PRESIDENT GEORGE W. BUSH Message Board

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Politics : PRESIDENT GEORGE W. BUSH

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To: Arthur Radley who wrote (283137)	8/2/2002 10:21:48 AM
From: Arthur Radley	Read Replies (2) of 769667

The Fragile Recovery he latest raft of economic data released yesterday was cause for more heartburn. The weaker-than-expected growth for the second quarter of this year — an annual rate of 1.1 percent, half of what had been predicted — calls into question the solidity of the recovery and gives more credence to warnings by some analysts that the economy could be in for a possible "double-dip" recession. The new government data also seem to confirm a fact of life not always acknowledged by pure economic orthodoxy — the volatile stock market's impact on the "real" economy. Those free-spending consumers who have been propping up the economy at a time of sluggish business investment do not inhabit a parallel universe, untouched by Wall Street. They are the same people who receive increasingly painful brokerage statements, which helps explain the falloff in consumer spending growth shown in yesterday's report and earlier surveys indicating plummeting consumer confidence. For weeks President Bush and his top economic advisers have been trying to change the subject from that of a stock market spooked by corporate scandals to that of the economy's sound fundamentals. They may now need another subject. Mr. Bush tried to minimize the news by talking about the more positive average growth for the first two quarters. The first quarter's rate was revised downward yesterday by a point, to a still-healthy 5 percent, bringing growth for the first half of the year to 3 percent. Other officials were quick to note that business spending is declining now at a slower pace, and that investment in computer equipment and software actually rose. Strong productivity numbers, the strength in the housing sector and a low-interest-rate, low-inflation environment are also signs that a continued recovery is still possible. The president could not have reassured anybody yesterday when he said he remained committed to making his fiscally disastrous 10-year tax cuts permanent. It seemed especially surreal to mention this, as he did, after saying that he would ask Congress to show some fiscal restraint.

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