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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Patricia Trinchero who wrote (125846)	2/7/2001 11:51:39 AM
From: swisstrader	Read Replies (1) \| Respond to of 769667

Pat...think I just got my answer...Bush WANTS a recession!...hang on to your portfolios folks!: Published Tuesday, Feb. 6, 2001, in the San Jose Mercury News Facts don't support talk of recession BY ROBERT RENO CONSUMER confidence has sagged miserably, according to the Conference Board's widely watched and widely respected monthly survey released last week. How could it not have? Consumers have been assaulted for weeks by the incessant yammer of folks eager to prove that the sky is falling because a number of corporations failed to meet their earnings expectations. That and some uneven signs of fall-off in economic growth have combined to produce a full-blown recession scare. It was whipped along by the new president, who injudiciously declared he was ``reasonably pessimistic'' about the economy, a thinly veiled pitch for his surplus-squandering tax cuts. This may mark the first time in history a president has tried to jawbone us into a recession. Such hysterics might have been justified two months ago, when the signs were tentative and the data incomplete. But they are ludicrous in the light of what has happened since. Two cuts in interest rates by the Federal Reserve, both of them twice the size of its usual adjustments, are as strong a signal as we need that Alan Greenspan does not want a recession, does not need one and does not think one is necessary. It cannot weigh lightly on the Fed chairman's mind that it was his monetary tightening that led directly to the recession of 1990-1991. George Bush, the world-bestriding Gulf warrior president, was, unfairly or not, quickly turned into a dithering bumbler who became a one-term president after unemployment rose to 6.8 percent in 1991 and peaked at 7.5 percent in 1992. Maybe one Bush recession is all Greenspan wants on his conscience. Anyway, comparisons to 1990 demonstrate how unnecessary a recession would be this year. It was a steeply rising inflation rate, which rose to 4.6 percent in 1989 and exceeded 6 percent in 1990, that provoked Greenspan to slam on the monetary brakes and effectively doom the last Bush presidency. Today, inflation is about as non-existent as it has been in more than a generation. Greenspan could prudently whack another one or two percentage points off interest rates without serious inflationary risk. The Fed's Open Market Committee, describing the Fed's intentions, last week promised ``a rapid and forceful response of monetary policy.'' These are strong and straightforward words from people who normally couch their language in impenetrable subtlety and wordy jargon. The biggest single factor working against the possibility of a recession this year is the Fed's freedom of action, which is inherent in the absence of any serious inflationary threat. But there are other factors. The last recession took place against a backdrop of some of the biggest budget deficits in history, run up during the Reagan and Bush administrations. If nothing else, the experience of the past eight years teaches us there are multiple economic strengths and flexibilities that flow from a balanced budget. Or, take a look at the just-released figures on new home sales and personal income. Defying predictions of a further decline, new home sales leaped 13.4 percent in December. Personal income was up 0.4 percent in December, twice the rise that was forecast and twice the rise in November. Some figures reported last week are less encouraging. Gross domestic product grew by only 1.4 percent in the fourth quarter, its most feeble performance in five years. This came in well under the 2.2 percent that had been forecast. Meanwhile, the Congressional Budget Office, in its latest guess, said the budget surplus will rise to $5.61 trillion over the next decade, $1 trillion more than it predicted last July. Such a forecast does not exclude the possibility of an impending recession but does suggest that the forces pulling the nation out of it would be massive. The higher estimate was attributed by the CBO to expected higher rates or growth in worker productivity and business investment over the next decade. So I guess the question is whether consumer confidence has been undermined by real conditions in the marketplace and workplace or whether it has been battered down by external forces. It seems clear to be the latter. Robert Reno is a columnist for Newsday.